The mobile money makers

1 Mar 2005

Everyone is out to find what the next trend in mobile will be: music, video or TV? But the real trend gripping mobile operators is how to gain better profits from revenues.

When mobile operators report their quarterly revenue results, the average revenue per user (ARPU) figures are examined to gauge how well they are doing in the market.

In the months ahead, this emphasis may shift to average profit per user (APPU) as a more realistic measure on the health of an operator. It is possible that this shift will come about at the operators’ behest to demonstrate shareholder value.

The logic behind this is simple economics. Generally ARPU stays constant, slightly declines or can be overwhelmed by the increase in the number of subscribers. The true picture of a firm’s well-being is its profit margin and this is where the emphasis will be going forward.

Traditional operators will struggle to demonstrate value in a market beset by new puzzles such as mobile virtual network operators and how to create compelling 3G services that will generate a profit margin.

Already at the forefront of developments in this space and with an arsenal of solutions to this new conundrum is Valista, an Irish mobile technology payments vendor that has developed a strong track record in resolving the payments dilemmas of international mobile players in Europe, the US, South America and Asia. For the third year in a row Valista was included in the Tornado Insider’s Top 100 list of Europe’s technology firms and in November the company was included by IDC in a list of the 10 Emerging Wireless Players to Watch in 2005.

In recent months Valista signed a technology deal potentially worth up to €10m with one of the world’s biggest internet service providers, AOL, which boasts up to 23 million customers worldwide. More than 150 million subscribers worldwide have access to the Valista product suite, which is fast becoming the wireless payments and premium content software of choice for leading companies such as Vodafone UK, France Telecom’s W-HA, Orange and NTT DoCoMo.

As a means of resolving the profit dilemma facing mobile operators that have already learned to cope with rapidly growing subscriber numbers, Valista has established a consulting division that will leverage its experience of aggregating millions of transactions to enable other operators to identify new business opportunities and process improvements. Valista founder and CEO Raomal Perera (pictured) warns however that the company has no intention of becoming the “Accenture” of the mobile world.

During 2004, customers of Valista collectively witnessed a 340pc increase in transaction volumes through the deployment of the company’s technology. Designed for wireless and fixed-line operators, internet service providers and enterprises that require the knowledge of industry experts in the payments technology area, Valista Consulting is described as an educational service that provides an objective view of all industry technology solutions relating to payments.

Perera explains: “One of Valista’s differentiators is that we are in several markets across the world and working with key blue-chip companies. This has given us considerable insight and experience into how operators can derive revenues and profits from new services involving payment.”

Perera explains that operators have moved beyond quoting (ARPU) metrics to focusing on a new metric average profit per user.

He clarifies that at present Valista Consulting consists of three senior executives experienced in payment platforms. “It is starting small and our plan is to grow it gradually to become a niche, profitable business.

“Ultimately it will function as a catalyst for operators to deploy Valista products and services,” Perera concludes.