MonsterMob braced for transitional year

Ringtones specialist MonsterMob today wrote off profits growth in the UK until 2007 at the earliest as it waited for more people to use 3G phones.

The Lancaster-based firm said it was focused on rolling out services such as MobMusic, which allows people to download full-length music clips to their handsets, and this investment would hurt profits in 2006.

Its performance in the UK has been hampered since September by new guidelines brought in by Icstis, which regulates premium rate services, amid fears that children were inadvertently signing expensive subscription deals for ringtones.

MonsterMob pointed the finger of blame at “certain competitors” and said people had lost trust in subscription services, making it more difficult to find and retain customers.

This forced it to scale back its marketing efforts in the second half of the financial year in the UK.

Chief executive Martin Higginson said: “It is our view that the UK consumer is now demanding much richer mobile experiences, such as real music and video clips and that transparency and value for money will be a pre-requisite for our future success.”

Shares fell 10% as MonsterMob forecast a “year of transition and investment in the future in the UK” and said it was unable to replicate its acquisitions strategy in Western Europe after failing to find any that it could buy at the right price.

“We expect to see UK profits at a substantially lower level in 2006 than 2005,” Mr Higginson said.

“We believe we will see tangible benefits from our investments and approach during 2007, particularly as penetration of 3G services begins to gather more momentum.

“We remain very positive on the medium term opportunities in the UK mobile media market.”

MonsterMob reported pre-tax earnings of £3.7m (€5.2m) from its European arm, which largely comprises the UK and Russia.

The company focuses on mobile content for 16 to 30-year-olds and employs more than 500 people globally, with around half based in South East Asia.

Investec analyst Matthew Pearson said the UK was now likely to contribute only 6% to earnings in 2006 compared with his earlier forecast of 10%, adding: “We had underestimated the scale of the UK slowdown.”