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Edited Transcript of ONMOBILE.NSE earnings conference call or presentation 23-Jun-20 11:00am GMT

Q4 2020 Onmobile Global Ltd Earnings Call

Bangalore Jun 23, 2020 (Thomson StreetEvents) -- Edited Transcript of Onmobile Global Ltd earnings conference call or presentation Tuesday, June 23, 2020 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* François-Charles Sirois

OnMobile Global Limited - Executive Chairman & CEO

* Sanjay Baweja

OnMobile Global Limited - Global Group CFO

* Sanjay Bhambri

OnMobile Global Limited - President & COO

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Presentation

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Operator [1]

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Thank you. Thank you to all shareholders for logging on this call for the Q4. A good quarter. With all that's happening in the market. Just a quick note for everybody on COVID. I'm sure you read our note, but we had our 700 employees working from home all set up. It actually worked quite well. I know it was a lot of work from the team to make sure we're all set up on that front, but it did add no impact on our operations.

We have almost all our customers paying on time as being operators and having actually quite an increase on their side on the demand. We -- the small issues we had, and then we'll talk about it on the gaming side, is a small issue with one of our customers. Actually, I'll talk about now. Our customers -- one of our customers doing tablets for kids got their tablet stuck in China. So we had to reverse his revenue. So a small impact on the revenues on the Appland side. But as beyond them all outside, all our customers are paying on time. Now we have the employee -- now the office back opened. So we have just a small number of employees showing at the office. But as for the COVID, we went through very strongly and then we remain very strong on that front. So that was good.

It was a very good quarter also for Tones. We had a very important growth quarter-to-quarter, 10.9% quarter-to-quarter. And we actually cut back 7 quarters back in terms of growth for Tones. So both an increase of subscribers and ARPU. So many factors to that. Obviously, the fact that we stopped the growing in key markets like India helped. We actually had growth with bundles in some -- in India with some customers and some growth in Asia. And the activation of new customers across Africa really helped us on the Tones side. So now we are actually back on the growth path, which for the year; we're stable for the quarter, it's a good growth.

On the video side, quarter-to-quarter, there is a slight de-growth, but that's normal. Q4 is always a bit -- January, February is always down versus December. But on the yearly growth, as we can see, we have a very good 7.2% year-over-year growth on video. So that's a good growth.

Gaming investments. You might have seen the investments in the rob0, an AI analytics company, a very interesting company, a lot of synergies where we want to go with the new platform. So that -- we did this investment. The teams are working hand-in-hand with our team -- from the gaming team with Appland in the team in India. So a very good collaboration. I really look forward to the new gaming platform.

The Appland team is really working hard on getting the whole service on cloud gaming and social gaming. So in the coming quarters, we should have our product ready and launched. So this is moving forward very well.

And overall, I'm quite happy with the quarter. And I'll let Sanjay Baweja to review our financials. So Sanjay, please?

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Sanjay Baweja, OnMobile Global Limited - Global Group CFO [2]

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Yes. Thank you. Thank you, FC, and good evening, everyone. Moving on to the financial results. Our Q4 revenue has remained stable at around INR 152 crores vis-à-vis INR 149 crores in Q2. Despite the COVID-19 outbreak, it has impacted the entire global economy. Our key product lines actually, phones and contests like FC was mentioning, witnessed growth at 10.9% and 5.6% quarter-on-quarter.

Our gross margin registered a decline of 3.5% on a quarterly basis, with the margin coming down from 51.5% to now 48.7% in this quarter. This is ensuing from certain new deals that we've bagged, which have slightly high content revenue -- content cost resulting in dilution of our gross margin percentage.

However, we expect the content cost to turn down in the coming quarters as we start negotiating with legacy and new content provider and the impending increase of subscriber base. So clearly, a short-term increase or decrease in our gross margin.

In the current year, we've backed 14 new deals, including multiple non-operated deals, which we have -- which we embarked on our journey to the marketplace beyond operators.

On the cost front, our focus and effort on cost optimization continue to improve the trends of the past few quarters. Our manpower cost is down 9.2% quarter-on-quarter and 8.7% for a year-on-year basis. Our ongoing process automation and rationalization efforts will further enable us in rightsizing our manpower costs.

Our exit headcount for this year stood at 702 versus 796 last year. There is a significant improvement in EBITDA in the current year at INR 41 crores, which is 7.1%, with a 77.6% increase over FY '19 EBITDA at INR 23 crores, which was 4% in terms of percentage EBITDA margin.

Sequential quarter comparison also reflects that our EBITDA has improved to INR 12 crores at 8.2% in the quarter versus INR 11 crores at 7.7% in the previous quarters, which is a growth of 8.4%.

We believe that these upward trends in our margins will continue in the future quarters too. And the benefits of our cost optimization are here to stay, thereby improving our profitability further. We expect a double-digit number sooner at some point in time.

We are closely reviewing our LatAm operations in a bid to improve our profitability and may take requisite steps to eliminate the loss-making entities during the year. Our other profit parameters, such as operating profit, PBT and PAT, have shown tremendous growth on a year-to-year basis, demonstrating the benefit of cost optimization. Operating profit jumped by 160%, PBT by 38.8% and PAT by 46% on a year-on-year basis. On a quarterly basis, operating profit clocked a growth of 13%, PBT 138.8% to 174.5%.

As has been mentioned by FC, we believe that gaming is the next big step for us. And as you are aware, we are already invested considerable money in Appland and rob0. And we expect significant revenue uptick in this arena as move to the end -- towards the end of this year, which will not only reflect in the growth, but also contribute to our efforts of higher profitability.

For the year, our effective tax rate is down to 39.7% in the last year to 36.5% in the current year, has a net gain of INR 8 crores arising out of reversal of goodwill and earn-out ability is nontaxable. Our stand-alone India tax, however, includes onetime provisions on tax restatement of deferred tax assets pursuant to reduction of corporate tax rate. Further, the P&L also has the impact of prior period tax in Bangladesh branch and tax disallowance on impairment of our foreign subsidiaries, investment of all totaling to about INR 10 crores.

Currency has also played a role in yielding translation gains in the P&L with a ForEx gain of INR 5 crores in the current quarter and INR 4 crores in the entire year.

Congruent to OnMobile's conservative approach in accounting and reporting, we have written off goodwill out of Appland acquisition, amounting to INR 23 crores with a corresponding write-back, also of earn-out of the consideration payable amounting to INR 31 crores, which has resulted in a net gain of INR 8 crores. This is based on what we believe a very conservative view of the current valuation of our acquisition. The gain that's arising is classified as an exceptional item in our profit and loss. Tax balance at INR 275 crores as of March 31, 2020, versus INR 253 crores as on 31st December 2019. Our cash from operation is INR 22 crores in the current quarter.

As an update on the buyback, I would like to inform you that as of now, we have completed a buyback of 2.15 million shares worth of INR 6 crores.

That's all I had to say. Now with this, I hand over to the moderator for her to open the line for questions and answers. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We will now take our first question in the queue.

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Unidentified Shareholder, [2]

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I have a question on your content cost. So can you break up your content cost via your different segments, which is Tones, radios and likewise? Because your cost -- 50% of your cost today, it's like, I think, INR 65 crores out of INR 150 crores is content cost. So what is the target number you're proposing for your content cost going forward?

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Unidentified Company Representative, [3]

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We don't put these numbers off product-wise content cost. But let me say that, that we expect the content cost to continuously go down as we start doing our own -- getting our own content providers from the legacy contracts where the contracts content providers have been given to us by the operator, but our feeling is that it will go down. We'll not be able to give you the details in that measure as of now.

Sanjay, you want to add something to this?

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Unidentified Shareholder, [4]

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As a shareholder and what are your service lines paying, right? Because you say Tones, but I don't know how much you're paying for your Tones, right? Is it positive? And then why don't you -- this is a pass-through cost. So why, as OnMobile, you have to take up this cost? Why you can't you pass it to your operators, right? So I'm -- frankly, I'm confused. This company has never been transparent with their shareholders, and you don't want to break down your expenses. It's very confusing as a shareholder to understand what you people are doing.

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Sanjay Baweja, OnMobile Global Limited - Global Group CFO [5]

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We take your input. We will try and see how much more is there over the next quarter.

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Unidentified Shareholder, [6]

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Or I have to write to the authorities, right, because I think this is a very transparent question I'm asking you. And there is no reason why you can't give me the breakup of your content cost.

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [7]

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So let me just add. If you look at the video, video has clearly higher content costs than Tones. So on the video side, it all depends with the content provider and how much the content provider takes. But in terms of cost today, we have higher content costs on video than Tones.

Added to that, that we just recently additional deals, whereby we get higher -- even higher content costs at first, but the mix changes over time. So if you look in terms of margin, obviously, we make better gross margin on Tones than on Video right now because of that mix here.

So the new services that we have, have higher content costs. And that's a bit the mix we want to change with games also because the current service with games, as you know, we have to pay game developers, and that cost also is high as video. The key is to get a new platform that would be priced differently so that we can actually have a different mix also and make higher gross margins.

So -- and by the way, I totally agree with you. For a specific reason, we don't disclose all these numbers for now. But that's my goal for the coming quarters, to actually break it down and actually be clearer with the shareholders so that you understand the different businesses that we have within OnMobile and the different margins and actual investment costs and marketing also because the marketing cost is quite different among the product lines also and the go-to-market strategy, especially when we go direct-to-consumer versus the strategy of staying with B2B.

So I know that does not answer quite your question for now, but that's something we, for sure, need to do in the coming quarters.

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Unidentified Shareholder, [8]

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So I think, FC, I think one suggestion for your whole team is, you have almost the market cap and the cash on your books are equal, right? Today, I think nobody trust this company, right, because the kind of vague answers and the management interviews we get, right? So it really puts your 99 operators, now you have 82 operators. You acquired so many companies. You reached capital at $0.5 billion, right? At current interest rate, whatever you're doing as a turnover, you'll be making similar money in terms of that, right? So this company, in terms of return on equity, you can talk about whatever parameters, you can talk about innovation, you can talk about -- I don't know. You talk about any parameter, this company has not succeeded, right.

But yet, there is no -- the management never tries to help the shareholders and I know you're a shareholder having 50%, 49% of the stake, right? But then either you should make it a private limited company, right, because somehow we don't get the sense of what people are doing in this company. And it's very difficult to understand what your geographies are doing, which geographies being good, bad. There's no transparency, absolutely no transparency.

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [9]

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Yes. But there's a reason to it. And unfortunately, I can't explain all the details of why. And -- but I agree with you on the pricing, by the way. And I agree with you on the -- but trust me, we know what we're doing. And unfortunately, right now, we just can't explain the whole breakup and why it's that way. But that's clearly my goal in the coming quarters to be able to clear it up and...

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Unidentified Shareholder, [10]

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Start giving guidance. Because you fell off the wall, am I right? Start giving guidance. You might fail at times. You might succeed at times, right? But until you don't have a number, right, I think companies which are 500x of your size or 100x of your size gives guidance, right? So if OnMobile is not giving guidance, people really -- this is more like a private company. It's not like a listed company. This is private equity company where no -- we, as stakeholders, don't have anything with us. The share price buyback is INR 28. I don't know, like it's really confusing why you fail to give any answers.

The other question is, your operators have come down, right, from 99 active operators, we are now at 82 active operators, right? You have done 3, 4 -- 4 acquisitions in the last 5 to 7 years. So what does your future -- is the OnMobile going to be a B2B to B2C company? Or is it really likely to change? Because I really don't know. Your gaming is a bit tight, but you have acquired. But frankly, if I remove Appland numbers, you're doing -- -- you're de-growing -- like quarter-on-quarter, you're de-growing, right? And obviously, the management doesn't want to highlight Appland versus revenues. It's always molting, but that acquisition is an incremental number, right? Otherwise, you would have de-grown. So my worry is 11% was your games revenue since 11% is still your revenue. What is the value Appland bringing to us?

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [11]

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Well, 2 things. And we added a slide in the investor deck, and that's a bit what I spoke last time. If you look at the actual adjusted EBITDA that we're doing from operations, our core operations are growing clearly. I mean, Tones year-over-year's stable now, but -- in itself, it's achievement. But now with the last quarter's growth, really Tones is back on the track, and we're seeing growth in the coming quarters. So it's going to be a bit of up and down, but the general trends on Tones is growing.

Video is clearly growing with 7.2% growth. Now I agree that added to our mix on the Video with new content provider that we provided, that's why the increase of content costs and the decrease in margin here, that's how it's explained, but that's going to reduce over time. So we should make a good growth.

But one calculation that was important for me was to carve out the gaming investment, INR 125 million that we did for the year and the actual LatAm loss, which LatAm for me is really a territory where we have to -- we did lost last year, we did lose this year. So this loss has to reduce. As you can see, the loss reduced from INR 180 crores to INR 117 crores this year, and I'm planning to bring it down to a 0 loss in next -- by next year.

Now the gaming investment, right now, I totally agree with you. The gaming doesn't provide the kind of revenues that we were expecting. But keep in mind that when we bought Appland, we first bought a platform and then we bought a potential to grow revenues. And the reason I say this in order is that we needed a gaming platform, and we saw that there was additional development to be done on the Appland platform before we can start really generating revenues. And really what we're trying to do and I really look forward in the next quarters to explain you exactly the gaming strategy, but it's really doing something that's not out there in the market, something that addresses both the current 4G service with operators, with partners, with B2C. And with 5G coming up, I really believe we have a key solution that can hit most of these -- and also, we know with the rob0 also offering something to the game developers, that they see value to that sense also. So really being a core platform that touches multiple aspects.

Now in the product mix, obviously, it's like adding multiple business, right? You have a business on video, a business on Tones, a business on gaming. And there's not that much synergies between these 3 products, except from the fact that you can leverage the partners. But in terms of actual product development and product, it's -- they're really different services. And you're totally right, we should track these services separately, give you margin separately. And -- but there's a clear reason we could not do it yet, and we should be able to do it in the coming quarters. And once we can do it, I'll explain you why and hopefully you'll understand exactly why we could not do that in the past. But if I look at the core business growth, I mean, if you look at the profit from operation, just on our core business, it's been growing from INR 503 million to INR 651 million. And that's the business if we'll not be investing in gaming and not having these losses on LatAm.

So from my point of view, even -- in terms videos and Tones, actually, we have a business that's back on the growth side. And I understand when you look at the revenues, because the Tones really went down in the last years, it makes a huge difference if you can actually stabilize your products as they're going down like Tones and now they're really stabilized and that you're growing on every other product, it's going to make a big difference in the coming quarters.

And I know we have to be patient. I agree with you, it's been a long time, a lot of investments, a lot of efforts, but that's -- I really believe that we're in the right market. It's more a matter of aligning and switching over and changing the skill set also. Keep in mind, we had -- when I got into this company, we had 1,700 employees, mostly aimed at telecom operation. Now we're really changing into a media company. So more and more, quarter-to-quarter, we're seeing that change also.

And as you can see in the results, we're seeing more and more efficiencies in the operation, and it's not just efficiencies, it's a mix also. It's a mix of resources that are more aimed towards the media space rather than in the legacy space. So that's a bit the change we're doing.

And I appreciate your comments, and I agree with the disclosing that we need to be more transparent in the coming quarters, and we will

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Unidentified Shareholder, [12]

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So a final...

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Sanjay Baweja, OnMobile Global Limited - Global Group CFO [13]

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I'm sorry to -- sorry. Just sorry to disappoint you, but just -- I can just say that, that Tones give us -- gives us a maximum gross margin, whereas games is the least and [see that later]. We will come back. We will be able to give you in the coming quarters. But as of now, that's how we operate. We will -- we've taken your suggestion very seriously. We will make sure. And as far as the guidance is concerned...

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Unidentified Shareholder, [14]

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Yes, otherwise, I'll write to the authorities.

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Sanjay Baweja, OnMobile Global Limited - Global Group CFO [15]

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We definitely, like I've mentioned to you in the script that I said, that we will -- we are moving toward a double-digit EBITDA margin very soon.

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Unidentified Shareholder, [16]

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So put that on a sheet. Put that on a sheet saying whatever 4%, 5%, around about a more tight number, right? And let's be transparent. People will trust you more. If you are -- what, you want to be a $1 billion company without any guidance, and FC represents one of the largest private equity firms, nobody will put their money, a dollar into you. Today, we just see the kind of people you have on the call, right? So serious time that you just be more serious with your shareholders here.

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Operator [17]

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(Operator Instructions) You line is now opened

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Unidentified Analyst, [18]

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Hello? Hello? Can you hear me?

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Sanjay Baweja, OnMobile Global Limited - Global Group CFO [19]

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Yes, please.

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Unidentified Analyst, [20]

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This is [Shiv-Shivani]. I had a couple of questions. One is on the gaming side. I just wanted to understand, you did talk about it, but I just want to understand a little bit more in detail in terms of what is that you want to achieve, let's say, from a 3 years point of view, particularly, are you looking at just about developing the gaming part of it? Or you -- I'm sure you are familiar with the company called [SDL Ltd.]. Are you looking for a business model like that where you might actually be licensing in as well?

And what's the kind of investment do you envisage, let's say, over a 3-year period? That's question number one.

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [21]

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The model -- if we look today, every 5G operators need new services, and they're all talking about cloud gaming, but nobody in the market really have a very, very strong cloud gamings offer. So that it's really something on the first end that I really believe we can offer.

So again, of all, keep in mind, we already have about 35 to 40 clubs -- game clubs live at some operators' level directly with OnMobile or through partners with Appland that have already a list of partners selling to operators.

And today, I'm not satisfied with these clubs. They're very traditional clubs and with downloads and it creates issue with the app stores, with Android, doesn't work on IOS. So I really want a platform that's really flexible that yes, works on 5G, works on 4G, but works to solve this issue that we have today.

And that -- one of the reasons our gaming revenues are not growing is really because of that. There's an issue in the way we render the service. And I really want engagement at foremost where real engagement with real subscribers. A lot of the telecom services, they're very good at pushing subscription, people subscribe, but nobody uses the service. I really believe we need a gaming service where people use it, not just some marketing scheme where we'll make money and people don't use it. So that, for me, is really a key aspect. And that's the first aspect.

The second aspect is really social gaming. You need to be able to have a social cloud. And that's a big change also because today's brands, as you know, most operators and partners they use brand. And we need to have a service that goes beyond the brand where you can actually connect your friends on any operator.

So that social gaming aspect is very important. We've defined exactly what do -- a service that would make sense. And that's a link also between a B2C offer where we would directly launch, in India, a gaming service in key markets as India's foremost, but we're thinking about, obviously, markets in Europe and markets in the U.S.

But at the minimum, we have to make sure to hit the market in India with a B2C that connects both with our B2B service and a B2C service. So in terms of investments, and just to answer your question, Appland does have license. They had some license before. They do some small license on the side. But as an OnMobile perspective, this is not -- for me, the plan -- the business case is really about growing our own service revenues, subscription revenues or transaction revenues or revenues made by referrals with game developers. So really a service that's a core platform linking, connecting game developers with operators, with partners and direct-to-consumer.

In terms of marketing investments and continued investments in the operations of gaming or investments in gaming, my guess, and what I'm going to say is not a surprise to you, I guess, is that we'll need to invest a good -- I'd say, good $10 million in marketing to be able to sustain in the coming year, the gaming product as a B2C offer, which is the big difference, as you know.

I want to make sure leverage the actual relationship with operators. But I really feel we have something in the market that has a good 6 to 9 months advance towards the competition. And that's why we'll have to spend in marketing to make sure we keep that ground. And invest -- also continue investing in the platform. And that's why we didn't hesitate to do this investment in rob0. Now -- and there's real synergies with rob0 also. And the team was very experienced dealing with analytics with game developers. They already had successful deployments with some key game developers in the top 50. And for us, it was good knowledge, not just for using our platform, but for the relationship they have with game developers and the understanding that they have in the gaming space.

And that's key because when we pitch them what we're about to do, they said, "Wow, that's never been done. And great, we're really excited about it." So that's -- so that's what I can tell you about gaming right now.

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Unidentified Analyst, [22]

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Fair enough. And the second question was regarding -- pardon my ignorance, but I remember there was some transaction that you had announced with Jump Networks, I think maybe 2 or 3 months back, where Jump Networks was to buy from a stake at INR 76 per share. And that was canceled at a later date. So what was the transaction all about? And why did it get canceled?

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [23]

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Yes, I'm not a fan -- and that's -- I'm not a fan of announcing a deal that doesn't go true. Normally, when we announce, we closed the deal. For many reasons, when we did the deal this summer -- during the summer, we announced it in September last year with Jump. Everything was lined up for them to be able to do the acquisition. Now legally, there's special laws in India that we don't have here in the U.S. market. But legally, the stock price trades at INR 30, we're not allowed to sell our shares at INR 76, which -- don't ask me why, but -- so we were in a catch-22, where we had to announce the deal so that we can grow the stock. They have put some reserves on the side. And as you know, there's a lot of trading loss, but they're not -- they were looking to buy 18% of our shares, and they kept some money aside to buy -- to be able to buy some in the market, but they could not, at any time, go over 25% ownership because, as you know, it triggers an open offer, which on our side was not an option. That was a different plan altogether if it were to get triggered. So they were stuck in that limit. And for all these reasons, we had to announce a deal. Many things happened during the time we announced the deal and the actual time of Christmas time, and unfortunately, they realized that they would not have enough to grow the stock to INR 70 to get to -- the market did not react in a way we're -- it didn't -- it never hit above INR 45. So legally, we're not allowed to sell to Jump Network.

And although at the end, we gave a 1-month extension to try to find some other solution. We could not find a solution suitable to close this transaction. So a bit of a shame. Honestly, I'm not going to renew that again. I mean next time, if I -- the stock price is good and we want to do a deal, we'll do it right away. And if the stock is no good, we're not going to do a deal and then announce. So I'm sorry, I thought the market would have reacted in different ways. I really believe in multiple ways that -- our company's worth least onetime revenues. And every comparable in the world with the fortuity we have, with the properties that we have is at least at onetime revenues, but it seems like the market believes otherwise. And even if we have a partner that says, "Yes, I understand and I'm willing to invest on onetime revenues," it seems like the market doesn't believe so. So that's a bit of the update on the Jump Networks.

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Unidentified Analyst, [24]

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But what were we seeking out of that partnership is what I'm more interested in. What kind of value do you think Jump Networks would have brought in at 18% stake and not even a 25% for a strategy? So I'm just trying to understand what was the rationale behind that particular transaction.

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [25]

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Actually, Jump Networks was saying -- we saw a couple of synergies on their side with some of the products they had. But the real synergy was the other way around. They were really seeing OnMobile as being able to distribute their service across all the operators worldwide in Middle East, Africa and Asia. So they were really interested in leveraging OnMobile to be able to distribute their products. That was the true -- it's still something we can do. But keep in mind that for me focus is key.

I really view OnMobile as a key asset to be able to distribute key services. And that's exactly what we do when we launched a new gaming service, right? We take our gaming service, and we push it out through all our customers. We have to be very selective on who do we take on board to sell as a product and how much margin we make. And long term, in terms of focus, we cannot have 20 services either. So that's why if we do partnerships like this, we can just do 1, 2 or 3, not more. So we have to make sure we have the right partner. And I'm sure that's what...

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Operator [26]

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Right. And if I remember correctly, it was the promoter who was selling out at INR 76, right?

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [27]

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Yes, it was some of our shares that we were selling.

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Unidentified Analyst, [28]

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Yes. So I mean, should we read it as a signaling that's the value which the promoter sees and the promoter is willing to sell out at INR 76 because it was large chunk. It's not a small size percent or not 2% as to...

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [29]

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Yes. Now keep in mind, and I don't think that's a private information, but I just want you to realize that we are Telesystem. My family, we're the promoter through Argo Capital, through [OMSI]. Actually, their promoter is OMSI , but we have Argo Capital, which what -- Argo's one of our funds that dates back in 2000. So a 20-year fund. Normally, it's a 10-year fund. So we've been ruling extension for 10 years. Now what's very particular in the system is that we always have 50%. We -- it's common that we have 50% of ownership in our funds. So a big part is our ownership, but I still have some partners that are -- that have been there for 20 years.

So I was more looking for an extent, at the fair value for these partners and ourselves. So -- and I'm not hiding the fact that in the future, you can find a partner to buy -- to be able to offer a good price. My partner is great, but I really believe in this company, and I'm not selling my shares. I want to grow it. So that's -- obviously, I think it's an easier way to find partners for others if we believe in the company like before. So that's a bit the situation. So Jump Networks situation is exactly this. That's why they were -- that was providing liquidity to our partners, but unfortunately didn't work.

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Unidentified Analyst, [30]

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So in future, should we expect such kind of deals to happen where your partners will probably look to exit?

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [31]

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Yes. I mean, that's a possibility, and I'm really looking forward to find a partner eventually that could buy back our partners. So -- but not at INR 28. I mean, for me, it's a nonsense, the pricing. I mean how can we be valued the same price as the cash. Anyway, but that's -- I understand all the shareholders are very patient. I know we've said some things in the past that took more time. And that's why now I'm really aiming at gaming. Once we issued a gaming strategy and people can actually play with it and then you can play with it and you can judge by yourself how much you value that service, then we'll see what the impact on our -- and the rest of the financials is getting, as you can see -- rest of our financials are getting on track on the right direction.

So the mix of the 2 should make it -- we have a very good business in the sense that we have a good mix of legacy products that they have a long-term value still today, generating real EBITDA and future products that really will bring very interesting profitability in the future. So it's a very good mix, I find, in terms of investment.

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Operator [32]

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(Operator Instructions) Your line is now open, please go ahead.

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Unidentified Analyst, [33]

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Hello?

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Sanjay Baweja, OnMobile Global Limited - Global Group CFO [34]

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Yes, please go ahead.

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Unidentified Analyst, [35]

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My question is on the gaming side. Last year, we did an acquisition of Appland. And even after including that part, the gaming revenues have actually de-grown, which -- so if I exclude Appland there would be a significant de-growth in the business organic. Can you please explain that?

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [36]

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Yes. Keep in mind, when you look at gaming, there's the traditional gaming where we're selling games. So you're actually buying traditional games per download or subscription, and we added the game subscription club on top of it, which was the Appland Club.

Now as we said, when we bought Appland, we bought foremost a gaming platform. And second of all, a potential to grow revenues. It should be the other way around, obviously. But we really needed a gaming platform rather than selling other people's platform. And we knew that there was some development to be added to the Appland platform.

Now honestly, the gap, and I'll be honest with you, I was not expecting such a gap between the 2, where you're totally right, when we look at the year numbers, the traditional gaming just kept on going a bit. And we had expected some -- unexpected issues with the gaming service on the Appland side. So that's why, from my point of view, I see this revenues going a bit down.

I'm not worried in the sense that there's so much stuff I want from that new gaming platform that I know will solve the issue. But in terms of investment, I agree with you. When you look at the revenues, they're a bit down. And from my end, I really look forward in the next quarters to launch a new upgraded service and see the impact on the revenues. Our hopes are quite high on that.

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Unidentified Analyst, [37]

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Got it. Secondly, I think we launched a digital contest platform and also expanded in new geographies. In spite of that, we see a de-growth in contest as well. Do you want to comment on that?

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [38]

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Yes. Sanjay, you want to talk about this? Sanjay Bhambri?

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Sanjay Bhambri, OnMobile Global Limited - President & COO [39]

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Yes. Fundamentally, if you see in last few quarters, we have talked about the de-growth happening in India primarily because of the dynamics change. So whatever we've launched in digital has been basically a cushion in our de-growth overall from the content standpoint.

I'm happy to report that as soon as we are ending the year, the de-growth in India, rather the growth in telecom environment is quite stable. So fundamentally, our numbers are not de-growing that much in India, and that is helping us to stabilize the revenues.

Today growth in India was getting pushed through the launch of our digital properties. Obviously, we had a few digital properties launched last year. Our focus and the target is that we will continue to focus on that and grow that because, obviously, of 2 reasons, the ARPUs are higher on digital and the longevity of the age of service is pretty high on the digital. So we'll continue to focus on that.

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Unidentified Analyst, [40]

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Got it. Thirdly, on the CFO resignation, do you want to comment anything beyond what you have given as the press release, which is...

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [41]

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No. I mean I'm actually, I'm very happy Sanjay Baweja accepted to join as CFO. Sanjay has very deep expertise and experience in many fields and have worked with great companies. I understand also what it takes to take a company to the next level. So I really thank Sanjay for stepping in. And overall, I think it's good. Sometimes it's good to change the overall vibe also of the company. So I see for us, to get new expertise, new people on the team is key. And that's -- we'll see some additional team members in the quarters to come.

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Operator [42]

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It appears there are no further questions in the queue at this time. Mr. FC, I would like to turn the conference back to you for any additional or closing remarks.

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François-Charles Sirois, OnMobile Global Limited - Executive Chairman & CEO [43]

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Excellent. Thank you to all for joining this call. It's a year-end as that we discussed. So I know we closed the year. I really look forward in this year. We already started, as you know. And we're in -- I really -- just we're in a good position. To us, 4 strong products will make a big difference so that we stabilize the Tones. It's a very good news that the growth on video is there, and it should continue to grow is a good news. And as you can see, we stabilized -- contest is back on growth. And the gaming, I really look forward to be able to share this new gaming service with you in the coming quarters. So I thank you very much, and I look forward to our next call. Thank you.