OnMobile and Telefonica join hands for value added services in Latin America

Indian mobile value added services provider OnMobile Global secured a key win by entering the Latin American market. The company has signed a long term agreement with Spanish telecom company Telefonica Internacional to provide value added services in the region. The company recently tied up with Vodafone to provide value added services to its global telecom customers, initially in emerging markets. Value added services have proved to be an useful tool for operators to get more revenues out of their existing subscriber base.

In the current deal, OnMobile will deploy value added services like ring back tones (RBT), music radio, soccer portal, voice search and other services in the 13 Latin American countries which Telefonica operates in. These services will be rolled out over a few years, and OnMobile will invest $50mn (Rs 244 crore) to build this business. It will provide the equipment for these services and will also run the operations, on a long term managed services contract.

Most of the services to be provided will be rolled out with Telefonica on an exclusive basis. Telefonica has about 130mn subscribers in Latin America, one of its fastest growing markets. It has operations in its home market of Spain and other markets in Europe too, like UK and Germany. The company’s Latin American operations are driving growth and contributed to 38.3% of total group revenues in 2008. Mobile penetration in the region is still growing compared to the more mature markets. No further financial details have been disclosed in terms of the nature of the arrangement and the revenue sharing arrangement. The only indicator of its significance is the size of the investment that is being planned here.

In a conference call with analysts, in May 2009, OnMobile had said that its capex in the previous year was Rs 60 crore and that 2009 would be approximately the same. This new contract will see a quantum jump in the company’s capex. Once deployed, it will see a sizeable jump in contribution to revenues too. OnMobile had a market reach of 590mn plus subscribers as of June 2009, and the new contract will add 130mn subscribers or 22% to this figure. If OnMobile gets it right, it may be able to piggyback on this relationship to enter other markets in Europe too.

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