Oct 19, 2016 03:35 PM IST | Source: CNBC-TV18

OnMobile's non-core biz selloff meant to bring back focus

OnMobile has launched a new product portfolio and new consumer brand. This will help them enter the B2C market. But Pancholy says the company won't shift focus completely away from their B2B business.

OnMobile Global has sold most of its non-core business and assets, says the company's Managing Director and Chief Executive Officer Rajiv Pancholy. This is because the company had started making huge losses and the company lacked direction and focus.

"That is when we decided to get rid of costs and assets that were not core," he says.

OnMobile has launched a new product portfolio and new consumer brand. This will help them enter the B2C market. But Pancholy says the company won't shift focus completely away from their B2B business.

Below is the transcript of Rajiv Panchey’s interview to Rukmini Rao on CNBC-TV18.

Q: I want to understand the new branding that you have done of On Mobile. Is this a journey towards a more business to consumer (B2C) kind of a company and look at direct business versus your traditional business?

A: You are absolutely right. It is a journey that we are starting, a very exciting journey, I might say. But it is not going to be necessarily obviating a business to business (B2) business. That will also stay a part of our components and a part of our business for the future. What we are doing is we are actually adding a direct to consumer (D2C) component because we feel that being tied to certain geographies is not an option for services anymore. We need to be more universally available.

Q: Also if you can talk about the three new products that you have launched, what kind of investments have gone into it and when do you see breaking even on these products that you have launched and essentially what kind of customer base will these new products bring in for your company?

A: The investments that we have made so far, we have declared them as being two percent of our revenues so far for the last two years and that is pretty much what we have spent on product development and ideation so far. Now beyond this whatever expenses we do have will be related more to marketing and promotion. So, most of the research and development (R&D) has already been spent and accounted for. So, in many sense, it is a part of the financial performance you have seen over the last few quarters. In terms of the scope, as I mentioned before, we have 72 million paying subscribers today on a base of 1.5 billion that we naturally have just based on just existing footprint. So, there is a lot of space for us to gather and the new products will help us increase the share.

Q: Also, if you can give us a sense of your revenue mix currently and also the client base and the number of clients that you currently have.

A: We do business in 55 countries. In terms of names, you can pretty much count off all the top operators in these countries. Within India, we do business with Airtel, Vodafone, Idea Cellular, Tata and Reliance Communication. And similarly, all the major brands do come and ask us to partner with them and it is a privilege to work with them.

Q: You have been of course, consciously working towards cutting costs. I want to understand from where is that standing currently and what kind of levers are you using to expand your margins and what side you have also been divesting your non-core assets, so what is the road ahead for the entire non-core business? Are you going to completely do away with that?

A: Let me give you more of a historical perspective. Two years ago, the company, frankly was not doing well. We had generated several years of consecutive losses and something had to be done. When we looked at the root cause, it became very obvious to us that the issue was one of lack of focus. So, we had to pick a direction and say this is what we will focus on and plant a flag on it and the rest of the stuff is not important. That led to two things. It led to basically elimination of those costs that where projects that we do not consider to be core and also assets that we do not consider to be core, it had to be let go. But we are pretty much done with that. Now the story beyond this point is all about focusing on what we announce today which is the future apps, the future products, the future services.

Q: Also in terms of your own product expansion, can we expect more products while going ahead and also in terms of your own R&D, where does it stand today? What kind of investments are you making into building these newer products?

A: We have a very effective R&D team. These guys have done a phenomenal job. We have talent in house, so the stuff that you saw today has been conceived and developed in house. There is more to come over and beyond the three that you saw today.

Q: Also a sense on the international business. How is that doing and also domestic business accounts for about 20 odd percent of your business. So, in terms of your revenue mix, how is it looking like? Are you looking to tweak this and are you looking to concentrate on the India business?

A: India is a very important market for us. We are based in India, so it is also a bit of an emotional thing. But the revenue share between the two domains has been relatively constant. It is about 75 percent international and 25 percent Indian. Some of the changes you see quarter after quarter have more to do with local economic issues than any particular strategy. But like I mentioned today in the session, we are starting with introduction to these parts in the US, but the second stop and perhaps, coincidentally will be the Indian market and then we will go to other geographies.
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