NetXcell shifts focus to software

NetXcell Limited, a Hyderabad-based mobile applications and value-added services (VAS) provider, is shifting focus from its operators business to software development “as the former revenue-sharing business line has become a high-volume and low-value game.”

“Revenue-sharing with our business partners (mobile operators) is less than five per cent, despite being connected to about 70 million mobile subscribers. Hence, we are looking at software development as a new revenue stream, which is now only 5 per cent,” company's chief executive officer Debasis Chatterji told Business Standard.

The nine-year-old company offers its VAS technologies, which currently account for 70 per cent of its overall revenues, to carriers including Airtel, Aircel, Hutch, Idea, BSNL and Reliance.

“Our idea is to reach an optimal revenue break up – one-third from the operators business, an equal contribution from software development and the rest from our enterprise vertical from the next financial year,” he added.

Towards this, NetXcell is evaluating opportunities to enter MENA (Middle East and North Africa) and Southeast Asian markets “where mobile is a happening phenomena" to offer its software solutions including SMSes, routers and unstructured supplementary service data (USSD) gateways by the end of 2009. “Though growth may not be as big and as fast as in India, these geographies offer huge promise as from the Western world,” Chatterji said.

NetXcell recently forayed into the over $3-billion global mobile advertising market with the launch of Ad Junction, a mobile advertisement platform that enables delivery of targeted contextual advertisement on the mobile phone, besides supporting delivery of WAP, streaming video, voice portals, SMS, USSD and MMS. “About five companies are piloting the product and we expect at least three more client wins next fiscal,” he said.

The company, growing at over 200 per cent year-on-year organically, reported revenues of Rs 5 crore last year. It is looking at taking the inorganic growth route next year. “We are currently in talks with a couple of companies abroad that could complement our product portfolio and add to our roster of clients. We expect to close the deal next year,” he said, adding the company was in the process of raising a $3-million (approximately Rs 15 crore) private equity fund for the purpose. NetXcell had raised $1million (Rs 5 crore) in its first round of funding from Ike Lee, a venture partner of Ignition Partners, and RudermanCapital in 2007.