Convisual Leaps on IPOConvisual Leaps on IPO
Wholesale mobile messaging and entertainment services firm sees share price leap 60% on first day of trading
January 16, 2006
Some firms might shy away from doing their IPO on Friday 13th, but German wholesale mobile services firm conVisual AG (Frankfurt: C1V) flouted superstition late last week and saw its share price leap more than 50 percent on its first day of trading on Germany's Frankfurt stock exchange. (See Convisual Plans IPO.)
The company, which wholesales messaging and entertainment services to mobile operators such as Telefónica Europe plc (O2) , T-Mobile International AG , and Vodafone Group plc (NYSE: VOD), placed its shares at a launch price of €6.10, but when the market closed on Friday it had leapt 60 percent to €9.75.
The climb continued Monday, with the stock closing at €10.08, valuing the niche player at €18.5 million ($22.4 million).
The company says the modest €5.12 million ($6.2 million) raised by the listing will be used to expand its sales force, license more content, and even make small acquisitions to bolster its product portfolio.
Investors are clearly convinced by the growth potential of the mobile data services and entertainment markets, which Convisual describes as "turnover guarantors." The company recorded revenues of €6.4 million ($7.76 million)in 2004, more than €9 million ($10.9 million) in 2005, and says it's on course to grow that again in 2006 with a "significant increase" in revenues. It also believes it can break even on a consistent monthly basis from the middle of 2006.
The company is set to capitalize on the anticipated growth in demand for mobile entertainment services, such as multimedia mobile messaging, music downloads to mobile devices, and mobile TV -- a sector where it has already struck a partnership with GSM network equipment giant Ericsson AB (Nasdaq: ERIC). (See Ericsson Intros Interactive Mobile TV, ABI: Data Services Grow and Germans Send 'M-Cards'.)
Mobile TV is set to be a major area of service and technology development this year following trials and early carrier launches in 2005. (See Sunrise Plans Mobile TV, Vodafone Launches Mobile TV, NRK, Ericsson Trial Mobile TV, Qualcomm, Verizon Collaborate, Swisscom Tests Mobile TV, Alcatel Forms Mobile TV Unit, and TIM Trials Mobile TV.)
And it's set to be a lucrative market, if predictions by analysts at ABI Research are accurate: They reckon there will be 250 million mobile TV users by 2010, generating revenues of $27 billion for the service providers.
The outlook for Convisual, though, looks positive whether mobile TV is a big hit or not, according to a recent Light Reading Insider report on the emerging market. (See Mobile TV Gets Turned On.)
In his report, chief analyst Gabriel Brown notes that even if live mobile TV doesn't take off as a popular service, it will convert "a proportion of the mobile user-base into regular consumers of non-voice, visual content on their cell phones, opening up the promised land of rising mobile-data ARPU," and that would have a positive knock-on effect on the German specialist.
"One way to think of mobile TV, then, is as a way for operators to claw open the mobile data box and give non-voice ARPUs a much-needed lift," he adds.
Brown believes the mobile services market will see the "rapid expansion of channel availability and more intense marketing around mobile TV in the run-up to Christmas 2006."
— Ray Le Maistre, International News Editor, Light Reading
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