Singapore MediaRing Sees Profit In FY05
September 15th, 2005MediaRing, which was listed in 1999, provides Internet phone call services through a technology called Voice Over Internet Protocol, or VOIP.
This comparatively cheap way of making a phone call is fast becoming popular, with the industry’s significant growth potential acknowledged by U.S. online auctioneer EBay Inc. (EBAY) when it bought Internet-calling startup Skype Technologies for US$2.6 billion earlier this week.
The VOIP industry’s revenue has been growing at 22.5% a year, according to DBS Vickers, and research firm Gartner expects the industry to generate revenue of US$5 billion in 2007.
Kwek didn’t give an earnings forecast, but DBS Vickers Securities said in a recent note that the company is on track to record a net profit of US$3 million for the financial year ending Dec. 31.
MediaRing posted a net loss of about US$400,000 last year, but was profitable in its second half, and again in the first half of its current financial year.
The number of activeuser accounts has almost tripled to 5.4 million over the last 18 months.
Regional Ambitions
With sustained profitability in sight, MediaRing is now looking to expand its presence in Asia.
“We started looking at acquisitions late last year. Our ambition is to become a regional player,” said Kwek, without disclosing which countries are being targeted. She also said the company might expand through joint ventures.
“The company has been riding the wave and the wave is growing so fast we don’t really have great difficulty in expanding,” she said.
Just last week, the company entered the Cambodian market through a joint venture called Cambodia Data Communications Co., or CDC.
MediaRing paid US$200,000 for a 40% stake in the company, while its local partner, Anana Computer Ltd., holds the remaining 60%.
CDC marks MediaRing’s first venture as an Internet service provider. The company sees growth potential here as the country has a low telecommunication penetration rate.
The expansion into Cambodia follows a recent US$15 million fund-raising effort through a placement of 150.33 million new shares to Venture One Finance Ltd.
Including its existing cash holdings, the company has a US$50 million war chest to help fund its expansion through acquisitions and investments in the Asia Pacific region.
MediaRing’s network covers over 200 countries and its internet phone services are distributed through its local resellers and partners. About 75% of revenue comes from the Middle East and Indochina.
Kwek said the company doesn’t expect problems in China where state-owned China Telecom has started blocking access to the Skype service on the grounds it breaches laws and regulations governing Internet telephone calls.
In China, MediaRing’s unit is working through a partnership with state-backed China Netcom.
“So we basically sell VOIP under their branding, but the service is powered by MediaRing,” Kwek said.
