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Synchronica lands deal to bundle Mobile Gateway in Asia and FSU, shares soar

Synchronica (LON:SYNC) has signed an agreement with an emerging-markets focused device manufacturer to bundle the Mobile Gateway platform with its handsets.

The deal is worth US$1.28m of revenues in the first half of 2010 and has a guaranteed minimum volume commitment over an 18 month period. Synchronica will receive a number of milestone payments during this period, and the first payment is expected before the end of the year.

Investors liked the news, sending the shares up 20 percent in early deals.

The company noted that the manufacturer is focused on the emerging markets in the former Soviet Union and Asia, and Mobile Gateway will be bundled under the manufacturer’s own brand.

"The Commonwealth of Independent States (NYSE:CIS) is a key growth market for mobile data services where the number of mobile phone subscribers has now easily surpassed the population, yet fixed and mobile broadband penetration is still considerably lower than the world average”, Synchronica chief executive Carsten Brinkschulte commented.

“This deal will strengthen our position in the CIS where our products are already well established with three mobile operators in live operation.”

According to Synchronica, today’s deal emphasises the company strategy to market Mobile Gateway to manufacturers of mobile handsets as well as the mobile operators themselves.

“By working with Device Manufacturers, we can further accelerate the roll out of Mobile Gateway across emerging markets where there is increasing demand for mobile internet access, but financial constraints have so far prevented mass-market adoption", Brinkschulte added.


Broker FinnCap said in a morning note this contract emphasises Synchronica's strategy to supply both handset manufacturers and MNO's (Mobile Network Operators). Furthermore, the structure of the contract removes some uncertainty over payments and more importantly cash flow for Synchronica.

"Whilst the execution risks remain high for Synchronica, clearly activity levels within its end markets is improving and the frequency and magnitude of contract wins is increasing consistently," FinnCap added.

Synchronica develops industry-standard mobile push email and synchronization products. Its portfolio includes the flagship Mobile Gateway product and the device backup solution, Mobile Backup. Mobile operators in emerging and developed markets use Synchronica's white-labelled products to offer their consumer and business subscribers mobile email, PIM synchronization, and backup and restore services.

The company has started 2010 with a string of new deals, and gathered momentum both for the flagship Mobile Gateway product and for its latest addition to its product range: the MessagePhone low-cost device which was officially launched in February.

Indeed, earlier this month, Synchronica told investors that it has reached an important sales milestone, with the signing of its 40th mobile operator customer. The company currently has 20 mobile operators in live operation, with Synchronica's mobile email and mobile instant messaging products, and its mobile messaging products are currently being deployed to a further 20 carriers with launch dates pencilled in between June and August.

The company highlighted that it has now grown its customer base by 300% since 2007 and its products now have an addressable market of 660 million end-users.