Every now and again, one comes across a company that has fallen beneath investors' radar. It has no venture capital investment, no angels padding its way to stardom, and the amount it has raised from other institutions is extremely low. One such company is cellular content distribution and services provider Unicell Advanced Cellular Solutions Ltd., which, according to IVC Online data, has raised just $6 million from Kardan Communications, and Fishman Holdings, which holds a 20% stake.
The company, for it part, is aiming high, as are its managers, chairman Yohai Rayfeld and CEO Nimrod Kimchi, "We will reach a turnover of $300-350 million in the coming years," they declare. "Unicell aims to become an important player in the cellular content and information sector. We've managed to achieve this in Israel and we're now in the process of a drive to expand our reach to other regions, a drive that includes acquisitions and the expansion of local businesses."
According to Rayfeld, Unicell has been recording revenue from the year it was founded - 2002 - and became profitable a year later. It controls the local cellular information services and applications market and is currently expanding through a series of acquisitions. During the last eighteen months, it merged with TippCom Ltd., in a deal worth tens of millions of shekels, and at the same time, it began operating in the Indian market with a view to capturing between 5% to 10% of the value added services market there, through collaborative and strategic agreements with local media companies.
After acquiring TippCom, Unicell made a number of smaller acquisitions. In early 2008, it acquired Ukrainian company Euroinform for a few million dollars, and followed this with the acquisition of Web 2.0. social network Showme Ltd. for NIS 3 million, and Bee Contact Communications Ltd. for NIS 6.4 million. The company hopes to end 2008 with sales of NIS 200 million, a 150% increase compared with 2007.
Rayfeld and Kimchi aim to make Unicell one of the leading players in content management and cellular portals. The company now has 1,000 corporate customers, and 2 million private sector customers in Israel. Among its corporate customers are Egged, and the reality television shows "A star is born," and "Born to dance", and it is working in cooperation with mobile content adaptation company InfoGin Ltd., which has developed a platform for the automatic conversion of websites for mobile platforms.
Unicell is currently in the middle of a further funding round in which it is aiming to raise $10 million, which will be used to drive further growth in new markets. The company is now in talks with various investors, but Rayfeld preferred not to comment on the process itself.
Rayfeld and Kimchi both have a track record in founding and managing companies in different industries, one of which was Broad Digital (now Digital Kopel Software Ltd.), which provided localization services for Microsoft and Oracle products, and was later sold to New Kopel Ltd. (TASE:NKPL).
"We're thinking about an IPO," says Rayfeld. "We've consulted a number of investment banks and underwriters. We do not intend to make an offering until we have expanded our activity in further markets. We want to reach a point where 50% of our revenue will be generated by overseas activity, and once we do so, we'll hold an offering on Nasdaq or on the London Stock Exchange. Despite planning for the long-term, we find it convenient at present to continue operating without the restrictions that public companies are subject to. It gives us more leeway, as a private company, to get things done quickly."
Globes: So you're planning an exit?
Rayfeld:"Unicell is not a start-up. The funds we raised were to finance the acquisitions we made. Our goal was to create a pyramid with a firm base in the Israeli market, and then reproduce that success in other markets. We're now moving forward with our expansion."
Most Israeli companies in this sector don't bother with the Israeli market at all.
"Israel is a superb trial and testing site. There are four operators here and five million users, a lot of competition and cutting-edge infrastructure. This is a technology incubator, although it is true that the potential overseas is far greater because of the number of users there."
What sort of services are you offering?
Kimchi:"We're focusing on solutions for business - SMS tools, information services, polling and others. We're also targeting the interactive media market, including talkbacks, combined Internet and television polls, and cellular content where the focus is on music, video, and games. It is a massive market, even in local terms, and we now hold the digital rights for leading artists. We're responsible for the digital distribution."
Where will your revenue come from?
Rayfeld:"Our focus is on the developing countries - Brazil, India, and Russia. We collaborate with local partners in nearly every region we enter, but we make a point of ensuring we have control over the firms. These are markets where the potential is enormous. We've just about reached the ceiling in Israel since this is a market with 5-6 million users, but there are 250 million users in India, and the pace of growth in Brazil is phenomenal."
Rayfeld adds, "We believe that mobile will beat the Internet. The number of mobile handset users is already larger than the number of people connected to the Internet, and this trend will escalate further with the growth in the range of cellular content and the improvement in quality."
Eliezer Fishman is the controlling shareholder in "Globes."
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2008
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