Zamano feels ComReg pinch as new rules on texts eat into profits
MOBILE commerce company Zamano, the firm behind several premium-rate text-message services, saw its Irish sales slump in the first half of the year after new regulations cut into its subscriber base.
ISEQ-listed Zamano, whose services in Ireland and the UK include pay-per-text horoscopes and quizzes, said Irish revenues fell by 42pc to €2.2m between January and June in comparison to the same period last year.
It blamed this on new regulations from communications regulator ComReg, which require "double opt-ins". This means consumers must now opt in for a premium-rate service twice before they are officially subscribed. Zamano said this "effectively eliminated our subscription-based revenues" in Ireland in the second half of 2012 and first half of 2013.
The company employs about 30 people at its Dublin office.
It fared better in the UK, where sales rose by a third to €5.6m. However, it invested heavily in UK advertising to acquire new subscribers, which impacted on profit margins.
"While our major markets of the UK and Ireland are challenging from a competitive and regulatory perspective, we have started to gradually penetrate new geographies with our existing direct-to-customer subscription and non-subscription services," said Zamano.
Overall profits still jumped, with operating profit up by 14pc to €1.2m, even though total revenues fell by 5pc to €9m.
Much of this was due to the ending of a court case, which impacted profits last year. Zamano and an industry group took against ComReg in 2012 in a failed effort to hold off the introduction of new regulations.
The ending of this case meant that administrative expenses were down by more than a fifth in the first half of 2013 comparison to the same period last year, to €1.3m.
While Ireland and the UK are still its main markets, the company also recently opened up operations in the Czech Republic and Slovakia. It said six new markets will be entered by the year end, "which broadens our territorial base and gradually reduces our dependency on the UK and Ireland".
A text message product targeted at small businesses will also be launched next month in Ireland. Shares in the company had fallen by 3.2pc to 15c by yesterday afternoon.