>ONMOBILE GLOBAL LIMITED (INDIA INFOLINE)

■ Market size pegged at US$1.6bn with ample scope of growth
Mobile Value Added Services (VAS) has evolved in to a US$1.6bn ancillary industry to the Rs950bn a year Indian wireless market. Voice offerings such as Ring back tones and Voice portals are dominant in the domestic non-SMS space as against more data-centric VAS abroad. VAS accounts for 8-9% of wireless revenues which leaves ample scope of market expansion.

■ OnMobile dominates the market with 12.3% share.
OnMobile Global has emerged leader in a fragmented industry deal with a 12.3% market share in the non-SMS segment. It enjoys several early-mover advantages. Firstly, long-term relationships with major telecom operators are in place as its servers are embedded in the operators' core network.

■ OPM likely to stay in narrow band
Upfront content development costs and relatively fixed staff and other expenses have led to margin drop of over 14ppts over Fy07-09. However, as the company indicated in its Q4 earnings call,content costs, which have been edging higher in the past few quarters, which is likely to stablize at current levels. We forecast OPM to stay within a narrow band of 30-33% in the next two years.

■ Dominant status underpins EPS CAGR 32.3%; BUY

■ Mobile VAS has transformed in to ~US$1.6bn industry

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