JSE-listed FoneWorx, which provides mobile solutions, expects its text-based unstructured supplementary service data (USSD) service to continue gaining momentum in the next two to three years.
The group yesterday reported its results for the year to June and said revenue gained 7.7%, to R98.6 million. Its operating profit improved 16.8%, to R28.6 million. It says the growth performance was primarily the result of the significant revenue growth from MediaWorx.
CEO Mark Smith says the group saw good growth in its MediaWorx division, which bolstered revenue 40% and gross profit 64%. He says it is pleasing that this unit is starting to balance out its BizWorx business, on which the company had been dependent.
Smith says USSD is “growing phenomenally” and is currently the “flavour of the month”. USSD fits into FoneWorx's MediaWorx platform.
Foneworx has five operating entities, including BizWorx, which focuses on business-related products, and MediaWorx, which provides information and entertainment services. It also has three early-phase units: CarbonWorx, DRWorx and IDWorx.
Growth potential
FoneWorx has its own USSD platform, which drives items such as Pep Chat, which is an interactive message system used by over two million Pep Stores customers to send messages to each other in a similar way to Mxit, explains Smith.
Smith says the technology is now being integrated into backend functionality, which allows for a lot more integration into more technology. He says the only cost is the data rate, and FoneWorx does more than 400 million sessions a month, which works out to about 2.6 million to three million unique users.
FoneWorx expects up to 20% year-on-year growth in uptake of USSD for the next two to three years. Smith says it is becoming more prevalent across sectors as it can also be used for payment transfers.
Stock moves
Smith says FoneWorx will continue to pursue its growth strategy and is advancing a number of potential strategic opportunities, such as its recent collaboration with the Kirsh family.
The group will hold a special general meeting next Thursday to vote on its proposed buyback of the Industrial Development Corporation's 30% holding, which it wants to sell to Isaac and William Kirsh (the Kirsh family), at the same price. FoneWorx will buy, and sell, the shares at 130.81c.
So far, it has received undertakings from shareholders holding 52.8% of its stock that they will support its buyback.
The board is positive about the outlook for the 2013 financial year as BizWorx continues to provide solid annuity income and, with the launch of Email2Fax, a new revenue stream will supplement the existing revenue.
Digital spend, as part of entertainment and media, is intended to grow in line with worldwide trends and MediaWorx is well placed to provide a broad range of services oriented around mobile handsets and tablets, which form the “lion's share” of digital spend, says FoneWorx.
The group is confident that, although IDWorx, DRWorx and CarbonWorx contribute a small percentage towards the total revenue of the group, they will provide improved growth as and when key external factors, within each of these respective eco systems, drive businesses to adopt these services. In their developmental phase they do not require additional human resources or excessive capital.
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