Feb 04, 2013 09:51 PM IST | Source: CNBC-TV18

India business to de-growth in next one quarter: Onmobile

De-growth was again impacted by telecom biz in India. Onmobile Global revenue was under pressure, it was down 2 per cent. However, its margins were higher due to forex.

De-growth was again impacted by telecom biz in India. Onmobile Global revenue was under pressure, it was down 2 per cent. However, its margins were higher due to forex. In an interview to CNBC-TV18, Mouli Raman, Co-Founder & MD, Onmobile Global said that he expects de-growth in India business for next one quarter. "After that it will be flat for a quarter" he added.

Below is the edited transcript of his interview to CNBC-TV18

Q: The India business has de-grown and now it is down for seven consecutive quarters. For how many more quarters do you expect the pain to remain on the India business?

A: We expect de-growth in India business for next one quarter, after that it will be flat for a quarter. Then we expect increase in revenues. On international front we are making pretty good progress on Latin America and Africa. We are continuing to see good progress from the consumer’s standpoint for our products. In Europe we have had pretty good growth this quarter because of one of the Ring Back Tones (RBT) systems. We have seen increased penetration and more revenues from that. We are also seeing pretty good traction from the operator’s standpoint for our RBT service in Europe today.

Q: Will degrowth or contraction for another quarter is just the base effect that will help or will it be that you are actually seeing visibility of better orders?

A: In India the increase in revenues are going to come because of two or three reasons. One is that all the policies that are needed to be implemented will be completed by February. As a result of which there is going to be an impact for two-three months. There is going be an increase in base effect.

Today there is a clear acceptance of the fact that for us to grow revenues and get in more services we need to have a more open ecosystem. The ecosystem has to be worked on by all the stakeholders including operators and Value Added Services (VAS) providers. That is starting to happen now and it will take about three or four quarters for it to materialize. After that one will see more services coming onboard and hence more revenues.

Q: What is the kind of recovery in the India business in FY14? What kind of a growth rate could we expect?

A: I think on a year-to-year basis it will be lower single digits.

Q: What kind of growth could be expected from your three key markets, namely Africa, Europe and Latin America?

A: Overall, over the next year or so we expect to have a growth rate of anywhere between 17-20 per cent at the company level. That is going to be because of the subdued performance in India as well as pretty good growth in these three markets.

Q: Just wanted to know a sense of how business is shaping up in terms of hiring, new orders, billing pressures? Is all that on the mend?

A: In Latin America we have seen good traction from the consumer standpoint. We believe that we will continue to see good traction from the consumers over the next 12 months. We are also in advance stages of negotiations with new operators. In Latin America we are live with only one operator which is Telefónica.

We are in discussions with other operators because our result there is much better than any competition. So, we are very bullish on getting new operators on that front. In Europe we have seen pretty good traction for RBT. We had launched RBT in a large operator in Spain.

The results have been very good. On the back of it we have got two more orders in Spain which we are in the process of rolling out. That should rollout in the next three to six months. We have got another order in a different country on RBT.

So, if we show good progress on two or three of these fronts, we believe that Europe will open up for RBT over the next 12-18 months. That is what is going to give us growth there. In Africa we are in the early stage of growth. We are seeing very good traction from the consumers’ standpoint based on the results that we have shown. This is better than any competition. We believe that we will be able to win more customers there.

Q: How did the margins look when you adjust them for forex on a QoQ basis and where are the margins likely to stabilize going forward?

A: Overall the EBITDA level our expectation would be around 23-24 percent on an annual basis. Operating profit of abound 10-11 percent is where we are looking at.

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