Global X Management Company is now halfway through their rollout of six China sector ETFs with today’s (12/09/2009) introduction of Global X China Technology ETF.

The first two (consumer and industrial) were launched last week, and the remaining three (financials, energy, and materials) are expected before the end of the year.

The new ETF has an expense ratio of 0.65%, and the underlying index uses a capped weighting methodology whereby the percentage weighting of each constituent is capped at 4.75%. The excess weight is allocated proportionally to the constituents whose percentage weight is not capped. This methodology should help provide a true sector representation without the extreme company overweighting present in the popular ETFs like the US Select Sector SPDRs. Only stocks which are tradable for foreign investors are eligible for inclusion. Index members must either be domiciled in China or have their main business operations in that country.

Global X China Technology ETF (CHIB)  will track the S-BOX China Technology Total Return Index developed by Structured Solutions Ag for this ETF. The index fact sheet shows 26 constituents with 15 of them subject to the maximum 4.75% cap weighting. Those 15 are: China Mobile, China Telecom, China Unicom, Tencent Holdings, Baidu.com, Alibaba.com, Netease.com, Foxconn International Holdings, Lenovo Group, Ctrip.com, Shanda Interactive Entertainment, Sohu.com, Perfect World, SINA, and Giant Interactive Group. Top industry representation according to the CHIB fact sheet  includes internet 50.0%, telecommunications 30.8%, and hardware & software 19.2%.

Over the next days and weeks, Global X Management Company plans to launch three more China sector ETFs. These are included in the prospectus dated 11/24/09 and will cover the energy, financial, and materials sectors and will also be based on S-BOX indices representing the respective sectors.

The launch of CHIB comes on the heels of the Claymore China Technology ETF (CQQQ) which began trading yesterday (12/08/2009). Here are three reasons why I like CHIB over CQQQ:

1. CHIB is part of a family of China sector ETFs allowing investors to fine-tune their China sector exposure. While Claymore offers other China related ETFs, CQQQ is more of a stand-alone product.
2. I believe the capped weighting approach used in the S-BOX indexes provides for better sector exposure than the more traditional market-cap weighting employed by the AlphaShares indexes.
3. CHIB also has slightly lower expenses of 0.65% versus 0.70% for CQQQ.

Two days ago there were no China technology ETFs, and today there are two of them. It is questionable whether the current ETF marketplace can support two such products.

Norways Telenor Group launches new operator across India: Uninor launches across seven circles, encompassing 600 million end users.

Telenor’s Indian mobile operation, Uninor, today announced the launch of its mobile services in seven Indian telecom circles, making it the largest single day launch in the telecom history. On the first day of service Uninor will cover a footprint of close to 600 million people.

Uninor services were launched simultaneously in the circles Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West and Bihar (including Jharkhand), making it the widest coverage any operator has launched within India. The launch of Uninor services happens eight months after Telenor Group finalized the transaction with Unitech Group and made the first investment into Uninor on 20 March.

“It has been highly satisfying to witness today’s launch of Uninor services across India. By providing quality mobile services, I strongly believe that Uninor will bring about a significant and positive impact in the daily lives of its customers in India”, said Jon Fredrik Baksaas, CEO and President of the Telenor Group (TELNY).

“Establishing a mobile operation of this scale in record time is truly an impressive achievement. I am confident that Uninor will keep the same high momentum going forward to become a preferred provider of mobile services to the Indian population and a significant mobile operator in the Indian market. The Telenor Group is committed to this operation, and will back Uninor with our capabilities and vast experience from other markets to support a successful entry in India”

“With launch in seven circles and roaming agreements in place for the rest, we have started our service in India on day one as a pan-Indian national operator. This is a proud achievement of a committed and talented team. While our launch today is indeed a milestone in a longer journey to become a significant operator in India, we are delighted to have made such a strong start,” said Stein-Erik Vellan, Managing Director of Uninor.

A model for future telecommunication operations

Uninor has established an organizational model, utilizing the unique extend of infrastructure sharing and large degree of outsourcing services available in India. With extensive use of outsourcing, Uninor has created a fast, flexible and efficient model for future growth.

“The Indian organizational model represents a new and innovative approach to setting up a light and cost-efficient telecom operation”, said Mr. Jon Fredrik Baksaas. “I believe that Uninor’s organizational approach will make them faster and more agile than a traditional mobile operator”.

India, with its population of 1.2 billion people, represents a market with high degree of diversity between the different regions. To cater for different needs, Uninor has established a decentralised and empowered organization with 11 regional hub offices to get closer to their customers. In less than 1 year, Uninor has recruited more than 1800 employees that now are trained, prepared and inspired to meet the Indian customers demand.

“Uninor aims to provide the young ambitious Indian customers with services that help them in their daily life, and support them in fulfilling their ambitions”, said Stein Erik Vellan. “Our regional offices allow us to listen to our customers’ needs, and respond and act differently in each region based on our local presence and knowledge.”

The Uninor launch also represents the largest ever distribution at launch by any operator in India. From the start, Uninor will be retailed at over 210,000 points of sale through close to 1000 exclusive distributors in the seven circles. Uninor services will also be available in 17 exclusive company owned shops and 50 exclusive franchisee shops.

“Ab mera number hai”
Uninor will leverage from Telenor Group’s established marketing and design framework. As in several other markets where the Telenor Group is present, the brand follows Telenor’s brand strategy, combining the global position of the Telenor Group with a distinct local identity. Uninor’s tagline is “Ab mera number hai” or “My time is now”, set to target the young and ambitious individuals.

As we… and every computer on Earth, awaits the next breakout attempt over S&P 1112, let’s look at one of our holdings.

Like almost all our stocks, AsiaInfo Holdings (ASIA) has just been range bound for much of the past month – however it’s a good day to talk about it due to this nice writeup in Investors Business Daily, plus an IPO of a smaller competitor, Linkage Technologies (BOSS), coming next week. [cool ticker symbol] Today’s strong bounce in ASIA puts it at the top end of the range we’ve been “enjoying” (zzzzzz)… in complete parallel to the S&P 500 in fact. I plan to add on the “breakout” here… when and if.

So let’s look at the story on AsiaInfo Holdings story; generally this level of customer concentration is a big issue, but in China… well the government has decided there will only be so many telecom providers so there is no choice but to be concentrated if you are going to provide a service to this industry.

* U.S. telecom firms have hit a ceiling as most Americans have a cell phone and Internet access. These firms can only dream of untapped potential in China, the world’s largest mobile market.

* The Chinese government shook up its telecom structure 18 months ago. At the time, China had six major telecoms, split equally between wireless and fixed-line providers, and merged them into three. And to enhance competition, it allowed all three carriers to provide both fixed-line and mobile services. Then, in January, China granted the long-awaited third-generation (3G) licenses.

* Chinese software provider AsiaInfo Holdings (ASIA) is benefiting from the explosion of communication technology as carriers enter new businesses and become full-service operators, says Kun Tao, an analyst at Roth Capital Partners.

* The Beijing-based firm is the nation’s leader in telecom billing systems and business intelligence [BI] software, which helps firms find small pieces of data that help improve marketing and pricing. Other strengths include customer relationship management [CRM] and security software, as well as software that controls spam, manages networks and helps users keep track of their clients.

* “3G licenses will provide AsiaInfo with robust growth as the rollout involves major upgrades to provide a huge pool of customers with massive amounts of data,” Tao said. “All three now are full-service carriers, and each one has to add infrastructure to meet the demands of their growing customer base.”

* In September, the nation’s three main carriers, who account for 85% of AsiaInfo’s sales, hit a milestone by amassing 1 billion customers. China Mobile (CHL) had more than 508 million, while China Telecom (CHA) and China Unicom (CHU) boasted 241 million and 250 million, respectively.

* China’s big telecoms have curtailed capital spending over the past two years. This was partly due to the recession, but also in anticipation of the spending spree that would come upon the arrival of 3G licenses.

* China’s telecoms will aggressively spend on technology to capture share in the lucrative market for mobile data services, says Sean Jackson, an analyst at Avondale Partners. For example, China Mobile plans to spend $55 billion for infrastructure upgrades from 2009 to 2011. “These carriers are all in the initial phases of launching 3G services in a land-grab strategy,” Jackson said. “The numbers are staggering in terms of the investment requirements to build up these new businesses.” An increase in the popularity of 3G services would be a huge boon for AsiaInfo as it would likely result in newer billing and business intelligence projects, he says.

* Telecoms love 3G because they can bill for a wide range of new video services, but it presents new billing challenges. AsiaInfo is happy to help. The company has started implementing new billing and CRM software in 11 provinces with four more to go for China Mobile. On average, billing and CRM contracts bring in $2 million per province, while BI contracts rake in $1.5 million, Jackson says.

* In 2010, China Unicom is expected to roll out BI solutions to all 31 provinces, with AsiaInfo and other vendors bidding on the contracts. The firm is also bidding on two China Telecom contracts with more to come and should know the results by year’s end.

* The company should see “at least 45% top-line growth in 2009,” Tao said. He forecasts an average of 30% yearly growth for 2010-2012. But the biggest gains, he says, should come this year and next.

* Much of the talk has centered on billing, CRM and BI, but AsiaInfo made a couple of moves last quarter to build up its portfolio and expand its geographic footprint. “These won’t add much in the near term, but they are indicators that AsiaInfo is working to diversify beyond just the China telecoms,” Jackson said.

* First, it acquired SmartCall in October. The deal gives AsiaInfo a call center that will provide targeted marketing campaigns to telecoms as competition intensifies to build up their customer base.

* Then, AsiaInfo hammered out a joint venture with Singapore to provide its core software to the country. The partnership will grow its presence in a region that is experiencing explosive growth.

Some financial metrics

* Revenue for the third quarter jumped 42% to $63.5 million, matching views and marking the 13th straight quarter of double-digit growth. Its software and technology business unit contributed more than 80% to the top line.

* Earnings soared 75% to 28 cents a share, topping views by 4 cents. The Chinese software firm has turned in excellent quarterly profit for the past couple of years, posting double-digit growth in every quarter since 2007.

* AsiaInfo’s gross margin rose two ticks to 55%, and its operating margin increased from 12% to 16%. Asia-Info also has an ideal financial position, sitting on $236 million of cash and no debt.

Sounds too perfect… what are the risks?

* China Mobile remains AsiaInfo’s biggest customer — and its biggest risk. If the telecom giant slows its upgrades — there are only so many to be made — that will eventually drag on AsiaInfo’s top-line growth, Jackson says.

* Last quarter, the world’s largest mobile operator generated 60% of the firm’s sales, which have been growing at a rapid pace.

The headline in today’s Times of India reads – “Chinese mobiles sans IMEI won’t buzz from Monday.”

Mobile carriers in India will be required to hit the kill switch on any/all phones that do not have (or do not immediately obtain) a true International Mobile Equipment Identity (IMEI) number. The deadline for compliance is midnight November 30, 2009 . Otherwise it’s no service for you.

IMEI is an international standard identification number assigned to each and every mobile handset. Many counterfeit (brand name knock-off) phone manufacturers don’t bother to include an IMEI number or they simply assign a phony number.

For months now India has been warning users of counterfeit phones (a.k.a. bandit phones or the Chinese term “Shanzhai ji”) that they must register their bandit phones and obtain a valid IMEI number. This campaign has been dubbed the Genuine IMEI Implantation Programme (GII), and it’s being carried out by Mobile Service Providers’ Association (MSPA) of India across the country. Many bandit phone owners have been overwhelming GII registration centers and the MSPA estimates that some 25 million bandit phones will go dead tomorrow.

Come monday, the MSPA will run a cross-reference of all legitimate IMEI numbers versus the IMEI they have on record for a network user’s handset. If the mobile user does not have an IMEI, or if the IMEI is a phony number that does not match to the make/model phone, they will require the mobile carrier shut off service for that number.

Why are India’s telecom authorities taking this action? Simple … Money and power. The”bandit phones” are manufactured without the normal telecom approval and testing protocols required by virtually every country. In addition, legit manufacturers must pay testing fees, licensing fees and taxes to authorities. Bandit phones circumvent these pesky taxes/fees. Most of the low-priced counterfeit brand phones are manufactured in China. Chinese citizens are by far the biggest users of “Shanzhai” phones but India has some 30 million in use.

It will be interesting to see if China’s Ministry of Industry and Information Technology (MIIT) opts to follow India’s lead. I don’t expect that China will be so aggressive in quashing counterfeit handsets. If they were to abruptly cutoff all “Shanzhai” phones there might be protests in the streets. China does not like unrest. There’s no real way to track the total number of “Shanzhai” phones presently in use in China, but I would not be surprised if the number was north of 100 million.

“Shanzhai”  phones should not be confused with brand name phones sold through grey-market channels. There are about 2 million real iPhones with vaild IMEI numbers in China. China Unicom will grant amnesty to any grey-market iPhone owner who wants to become a Unicom subscriber and upgrade to WCDMA 3G speeds (most are now on China Mobile’s EDGE 2G). Regardless of the fact that the IMEI may show that the iPhone was acquired in the grey-market, China Unicom (CHU) will extend an olive branch and entice the customer to become an “on contract” 3G subscriber.

For more background on “Shanzhai” culture and bandit phones, please visit iPhone Asia

Looking at the Latin-American market from an economic point of view, we can see that there are a number of reports & indicators coming out, particularly from Brazil, Chile & Argentina, that the continent is bouncing back from the global recession a lot quicker than it’s Western counterparts.

Normally with stockpicks, I tend to focus on a single market, rather than a whole region, however, I have been looking at MercadoLibre for the last few weeks & am bullish on it’s prospects going forward.

MercadoLibre (Nasdaq:MELI) is an Argentinian based Spanish-Portugese language  online auction and fixed price marketplace provider across Central & Latin America, including key markets such as Brazil, Argentina, and Mexico. It also runs a payments processing system called MercadoPago that is similar to Paypal. Enjoying a near monopoly in this marketplace, it also operates as e-Bay’s exclusive partner for the region, with e-Bay holding an 18.3% stake in the company. Unlike it’s erstwhile partner, MELI has not become sidetracked from it’s strategy & is a pure e-commerce play.

This year the  has performed very well, running from a low of $12.51 up to todays price of $38.12, an eye watering $203% return for those lucky enough to buy & hold for the period. Looking at Q2 2009 earnings against same year 2008, it is obvious that MELI is bucking the global trend, as it has grown organic revenues by 19% & increased it’s net income by 127%, pretty spectacular figures & one of the main reasons that I am looking at this stock with interest. The following excerpt from MELI’s earnings review points to more bullish figures.

For me the main reason that I am interested in MELI is that in the countries in which it operates, broadband penetration has been traditionally much lower than in developed countries, but has been accelerating of late & is set to boom over the next 5 years.

According to MarketResearch.com Broadband penetration in Latin America and the Caribbean was about 4.9% in early 2009, well below the world average of 6.1%, however, competition has been increasing and prices have been dropping in most countries. Given the region’s general economic indicators, there remains ample space for expansion.

Looking at the three largest markets, we can see that a large internet subscription audiences exist; Brazil 29.3% (67.5M), Mexico enjoys 21.3% (27.4M) & Argentina 11.6% (20m) respectively, as of June this year. (source Internet Statistics). A recent survey by the Broadband Forum revealed that in the Latin America heads up the broadband growth rankings globally, with a 31.4% increase in broadband subscriptions this year. With Brazil alone adding 10 million users this year, making them the 9th largest broadband community in the world.

“I believe this year has shown that broadband expansion is not limited to the top industrialized countries, but is a key factor in assisting developing nations to gain a foothold in today’s tough market,” said George Dobrowski, Chairman
and President of the Broadband Forum.

As we have seen, the region has been faring better economically of late & with retail investors looking to developing markets for better returns, technology stocks should see greater capital inflows. From my research, it would seem that investors are now looking to South America for new opportunities & a stock with MELI’s past performance is very attractive indeed.

Chinese video game maker Perfect World reported a typical quarter; beating estimates in the current quarter and offering lowball estimates for the following quarter.

A quick glance at some of the metrics; analysts had been looking for $82M in revenue and 75 cents on the quarter. Revenue came in up 13.2% sequentially, and 54.5% year over year; expenses up a tad faster so gross profit “only” gained 8.9% sequentially and 48.0% year over year – gross margin dropped about 3%. Some of this is due to a non-video game blip that I’ll come back to at the end of this entry. Net income up 9.1% quarter over quarter, and 45.4% year over year… impressive numbers, but quickly forgotten as stock market lemmings already move onto the next thing to worry about.

* Total revenues were RMB590.0 million (USD86.4 million) in 3Q09, an increase of 13.2%, or RMB68.7 million, from RMB521.3 million in 2Q09 and an increase of 54.5%, or RMB208.2 million, from RMB381.8 million in 3Q08.
* The sequential growth in online game operation revenues was primarily attributable to the successful release of expansion packs for some of the Company’s existing games and a series of successful marketing activities.
* Gross profit was RMB495.0 million (USD72.5 million) in 3Q09, an increase of 8.9%, or RMB40.4 million, from RMB454.5 million in 2Q09, and an increase of 48.0%, or RMB160.4 million, from RMB334.5 million in 3Q08. Gross margin was 83.9% in 3Q09, as compared to 87.2% in 2Q09 and 87.6% in 3Q08.
* Non-GAAP net income attributable to the Company’s shareholders was RMB308.5 million (USD45.2 million) in 3Q09, an increase of 9.1%, or RMB25.7 million, from RMB282.9 million in 2Q09, and an increase of 45.4%, or RMB96.4 million, from RMB212.2 million in 3Q08.
* Non-GAAP basic and diluted earnings per ADS were RMB6.24 (USD0.91) and RMB5.88 (USD0.86), respectively, in 3Q09, as compared to RMB5.61 and RMB5.32, respectively, in 2Q09, and RMB3.77 and RMB3.56, respectively, in 3Q08.

So effectively PWRD printed a .86 v .75 expectation or 11 cents over. Guidance below; analysts had been looking for $87M and 79 cents.

* Based on the Company’s current operations, total revenues for the fourth quarter of 2009 are expected to be between RMB578 million and RMB602 million, representing a decline of 2% to an increase of 2% on a sequential basis and an increase of 38% to 44% on a year-over-year basis.
* This reflects the expected growth from the Company’s existing games and the anticipated contribution from the newly launched “Fantasy Zhu Xian.” It also takes into consideration that the Company does not expect to release any movie in 4Q09.

One caveat and something investors seem to be glossing over is Perfect World had a non-core business revenue bump in the last quarter due to a movie. So to some effect that overstated the current quarter’s results, and makes the comparables in the future quarter look weaker than they are. If you exclude the movie, revenue in the current quarter would of missed slightly – EPS would have been lower, but most likely still a solid beat, and the “growth” between this quarter and the next would look far better than the -2 to +2% cited. Again, management is very conservative and almost always comes in better than what they offer in guidance.

* Film and television revenues were RMB45.3 million (USD6.6 million) in 3Q09, as compared to Nil in 2Q09 and Nil in 3Q08. All the film and television revenues recognized in 3Q09 were related to the movie “Sophie’s Revenge” that was released in August 2009.
* The film and television cost was RMB27.0 million (USD4.0 million) in 3Q09, as compared to Nil in 2Q09 and Nil in 3Q08. All the film and television cost recognized in 3Q09 was related to the movie “Sophie’s Revenge.”

SinoHub, Inc today reported continued revenue growth for the three months ended September 30, 2009.

Total revenues for the 2009 third quarter advanced more than 28% to $36.2 million from $28.2 million for the 2008 third quarter. Revenues from electronic component sales, including procurement-fulfillment and spot component sales, increased more than 27% to $34.3 million for the 2009 third quarter from $26.9 million for the same period last year. Revenues from the company’s supply chain management services business rose more than 50% to $1.9 million for the 2009 third quarter from $1.3 million last year.

“SinoHub’s continued growth and new client wins validate our strategy of providing world-class electronic component supply chain management capabilities to the growing Chinese marketplace,” said Harry Cochran, chief executive officer of SinoHub. “During the quarter, we added several large mobile phone design house customers who are utilizing our services to optimize their supply chains. We believe their overwhelmingly positive responses are a clear testament to the significant value of SinoHub SCM, our proprietary online supply chain management software system.”

Selling, general and administrative expenses for the 2009 third quarter equaled $1.1 million, or approximately 3.0% of total revenues, versus $954,000, or approximately 3.4% of total revenues, in the prior-year period. Total operating expenses amounted to $1.8 million for the three months ended September 30, 2009 and included $272,000 in stock compensation expense. For the prior-year period, total operating expenses were $1.1 million and included no stock compensation expense.

Net income for the 2009 third quarter was $3.5 million, compared with $3.9 million in the year-ago quarter. Compared with the immediately preceding second quarter, net income increased in excess of 11%. On a per share basis, net income totaled $0.13 per fully diluted share based on 26.3 million weighted average shares outstanding for the 2009 third quarter, versus $0.18 per fully diluted share based on 21.4 million weighted average shares outstanding in the year earlier quarter. The increase in fully diluted weighted average shares outstanding resulted primarily from a private placement of SinoHub common stock completed in September 2008.

“By making it easier and more efficient for customers to operate their supply chains, we have become a vital link in the vibrant electronics component industry in China,” said Cochran. “Our ongoing efforts to demonstrate the importance of SinoHub’s services have allowed us to identify new opportunities to drive top and bottom line results, while building our position as one of the industry’s most valued providers of comprehensive electronic component supply chain management services.”

“SinoHub’s strengthening position in the electronic component supply chain industry in China, particularly in mobile phones, has allowed us to expand our business operations into sourcing mobile phones to emerging markets such as Vietnam, Malaysia, Indonesia and India,” said Lei Xia, president of SinoHub. “Our propriety SinoHub SCM platform provides a wealth of information that gives us a significant competitive advantage and serves as an almost insurmountable barrier to entry. By leveraging our considerable strengths and knowledge of some of the fastest growing markets in China, we are successfully opening additional avenues for increased growth and profitability.”

Total revenues for the nine months ended September 30, 2009 increased approximately 62% to $85.6 million from $53.0 million for the corresponding period last year. Electronic component revenues, including procurement-fulfillment and spot component sales, grew more than 57% to $79.7 million for the 2009 year-to-date period, from $50.6 million a year ago. Revenues from the company’s supply chain management services business rose significantly to $5.9 million for the 2009 nine-month period from $2.4 million for the same period a year ago.

Selling, general and administrative expenses for the first nine months of 2009 totaled $3.3 million, or approximately 3.8% of total revenues, compared with $2.0 million, or approximately 3.8% of total revenues for the first nine months of 2008. Total operating expenses year-to-date equaled $4.6 million and included $298,000 in stock compensation expense. For the 2008 nine-month period, total operating expenses were $2.8 million and included $6,000 in stock compensation expense.

Net income year-to-date increased more than 57% to $8.7 million, or $0.34 per fully diluted share based on 25.5 million weighted average shares outstanding. This compares with net income of $5.5 million, or $0.28 per fully diluted share, based on 19.9 million weighted average shares outstanding, for the 2008 nine-month period.

SinoHub’s cash and cash equivalents balance grew to $6.7 million at September 30, 2009 from $5.9 million at December 31, 2008. Working capital grew to $32.1 million at the end of the 2009 third quarter from $22.8 million at the end of 2008. Stockholders’ equity increased to $34.0 million at September 30, 2009 from $23.5 million at December 31, 2008.

Mobile content has arguably become one of the most interesting areas for Mobile Network Operators.

Many Russian operators are considering ways for their portals improvement in order to distribute multimedia content. Initially it was a niche piece of Internet market. At the moment that initial players are leaders in this area but all could change very rapidly as MNOs are invading this market. Fidel.ru and Soundkey at the moment have about 70% of the market. Other players are imobilko.ru, muz.ru, stereokiller.ru.

MTS Omlet was launched about half a year ago and rapidly increases its popularity by massive advertisement and comfortable payment schemes. MTS (NYSE: MBT) anounced its big interest in this new area: multimedia content for PC and Mobiles. Mobile Content is one of the biggest trends now and stands among Mobile Advertisement and Mobile Commerce. While Mobile Ads and m-Commerce are still very immature markets, Mobile Content has already achieved senior level of maturity. Hence it gets more interest from MNOs. They have to develop their business and in the current downtime there are no many ways to do that.

Main drivers for Content market growth:
1. Growing Russian Internet base.
2. Growing erudition and device capabilities awareness.
3. Growing legal content market share and Government pressure in content legalization.
4. MNOs become broadband ISPs and they are interested in getting money not only from access.

I think it is really good time for getting into this business with small investments (the crisis made all thing cheaper) and protect future incomes. It is clear that MNOs income could be increased not from big increase in penetration but from new services (Mobile Internet, Content, Advertisement, Commerce). And this becomes very important strategic task to take place in the markets of new trends in order to be able to have quick win there later.

Recently Megafon anounced it’s plans to launch multimedia Content Portal Trava (like Grass). It seems that they chose the similiar to MTS business model. I think we will see interesting competition soon. Beeline (NYSE: VIP) is taking a long pause regarding its plans in this area but it seems they simply don’t have resources for a new business direction development. Government held SvyazInvest should think about this area too – they have really big Internet subscribers base and many of them are buying content through Internet. Why not to earn that money too?

MNOs and Internet companies are not the only competitors here. The major players in this competition are handset and devices vendors. Just look at Apple iTunes, Nokia OVI store and you will see many more interested in Content business.

So, Internet companies, MNOs, ISPs, Vendors will be developing Content Portals and compete for the End Users. All of them have their pros and cons. Probably, the winner will be some partnered project. It could decrease investments and risks and increase end user value (and hence revenue for parties involved).

Some estimations of this area:
Fidel turnover is $400k in 2008, 2009 estimated at $570k, 2010 estimated at $1 mln
Fidel and Soundkey both have about 70% market share
MTS investments in Omlet are estimated at $5 mlns
Digital content market size is estimated at $2,4 blns (J’Son & Partners)

Guest article from Denis Bulichenko at Mobile Russia

In order to avoid under-utilization of its assets in Egypt, Wipro has begun to outsource its workload from India to Egypt, whilst

This “reverse offshoring” by sending work from its Indian clients to its offices in Egypt, is a sign of the growing multinational nature of the country’s outsourcing companies, according to Zawya.com.

The country’s third largest computer services company is also outsourcing business to selected external contractors within India as it becomes more sophisticated in how it manages its capacity following the financial crisis. “We are delivering to some of our Indian customers not from India but from Egypt. I had utilisation capacity available in Egypt and utilisation constraints in India so I leveraged Egypt for servicing Indian customers,” said Suresh Vaswani, Joint Chief Executive of Wipro.

Vaswani said Wipro (NYSE: WIT) was finding that it could increase its utilisation rate – the proportion of staff busy on projects against those sitting idle waiting for new contracts – by better managing its global workforce. In the Egyptian case, the company had to provide a software package service to a client in India but found it did not have the resources available locally. So it flipped the job over to a few hundred Egyptian employees who were at that point under-utilized.

Meanwhile, Wipro is bolstering its European prescence by expanding its development facility in Reading (UK) & opening an office in London for the first time. The company plans to use the Reading base as a centre of excellence for its Europe wide operations, whilst the London office will become the UK headquarters for UK operations.

“Taking on the ownership of the facility at Reading is the first of its kind for Wipro overseas,” said Mr Laxman Badiga, Chief Information Officer. “The expansion of development facility and opening of office in London reinforces our commitment to the region.”

Wipro earns about 26% of its IT services revenues from Europe, with the UK one of its key markets in Europe with a large customer base of blue chip clients.

India’s information technology outsourcing industry, one of the most important drivers of urban prosperity in the country, has gone through a tough 12 months following the meltdown of many of its financial services clients. The industry reported 16.3% growth in export revenue to $46.3 billion for the year ending in March, compared with a year earlier, but most was in the first half of that financial year, before the Lehman Brothers collapse. In July, the industry forecast only 4 to 7 %  growth for this year, which would be one of the slowest on record, although these figures could yet prove conservative following the recovery in the global economy in recent months.