VAS TOP 10: #1 OnMobile - Standing Tall

OnMobile, the firm which once held the proud position of being India's largest player in the value added services (VAS) space and the first VAS company to go public, is today driving on a dark road. Let us take a sneak peek at its performance and the reasons for its fall.

Growing swiftly from a company with just `2 crore in 2002 to a company with more than `600 crore revenue in 2012, OnMobile replaced the old tring tring to the hugely popular ringback tones, and now covers a huge list of operator customers and over 100 mn subscribers.

The company grabbed rollout deals with players such as Telefonica and Vodafone and implementation has been done on key geographies such as Mexico and Egypt. It is also providing a synchronization engine for T-Mobile, USA's Android based wireless phones and tablets.

The company also got deals from several major handset, chipset, and platform vendors in China having licensed the OnMobile Dilithium video calling software stack. The licensees will embed the OnMobile video calling software in a range of handsets and chipsets, including Android.

Its crucial acquisition of Dilithium Networks' 3G video technology is expected to be very beneficial for the company as the Dilithium products are deployed for operators such as BSNL, China Unicom, and Deutsche Telekom. Dilithium provides telecom VAS, voice portals, ringback tones, mobile content aggregation and distribution, interactive media portals, mobile advertising, one-to-one direct marketing on mobiles, and m-commerce.

In India, the Bengaluru based company also has a strong association with top operators and has signed MTNL for offering ringback tones to its subscribers in Mumbai and Delhi circles.

However the watershed year for OnMobile that saw rapid growth with domestic and global recognition in short span of time ended miserably in the last quarter of FY12 soon after its CEO and co-founder Arvind Rao got surrounded with financial irregularities and indulged in related party transactions and compromised corporate governance ethics.

Several high-profile exits from the company in the recent past compounded by allegations of financial irregularities hammered OnMobile's stock to its all-time low and also shook the confidence of its investors all over.

Taking preventive measures OnMobile has decided to have different executives handling the positions of CEO and MD.

The net profit of the company went down from `89 crore in FY11 to `83 crore in FY12, however, revenues grew from `537 crore to `638 crore during the period.

Though, OnMobile has been in a wait-and-watch situation and looking for the dust of controversies to settle down, however, the company also has some reasons to cherish.

OnMobile and Telefonica in Latin America continue to grow as services have been deployed across 7 countries, covering 85% of the total subscriber base. The active user base has grown over 50% from the last quarter to 4.6 mn users at the end of this quarter.

Its international operations have been generating nearly a third of its revenue from over 50 other countries.

It has just entered the enterprise segment through a maternal and child health project of the Bill Gates Foundation in Bihar.

With all those rosy days vanishing, the company is now gung-ho on data services especially ringback tones, music on-demand and sports content and some deals both domestic and international to do a comeback. It is also awaiting the announcement of the new CEO.