Published September 7, 2009

CORPORATE FOCUS
MediaRing returns to limelight

Plans to grow profits by new chairman BK Modi has been read positively by investors, reports TEH SHI NING

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MEDIARING made the headlines last week with the entry of its new chairman, flamboyant Indian billionaire BK Modi. Dr Modi's Spice Global took up a significant stake in the company, and new faces related to Spice took over key management and directors' posts.
New lease of life: Dr Modi has big plans for MediaRing - to integrate the VOIP technology that it has been known for thus far with mobile telephony

Its share price surged 44 per cent the day after the announcement, and high traded volumes testified to renewed investor interest in the stock.

But the firm is no stranger to the limelight. A decade back, prior to its listing, this Internet start-up with a focus on VOIP (voice-over-Internet-protocol) technology, managed to raise millions in private capital, with no profits to speak of and high expenditures.

It was not difficult to understand why there was much speculation over when it would go public. Among its backers were the venture funds of EDB, NSTB, UOB and Singapore Technologies, as well as Koh Boon Hwee, then SingTel's chairman, and the current chairman of DBS Group Holdings.

When it finally did list in November 1999, MediaRing was the first loss-making concern to do so on the Stock Exchange of Singapore (SES), under its newly liberalised listing regime. Then, the SES was encouraging high-growth tech firms to list, even if they were in the red.

New faces took over key management and directors' posts.

MediaRing's share price almost tripled on its debut, but those who rushed to buy a stake in MediaRing were in good company. Among its shareholders were Temasek Holdings, as well as Hong Kong tycoon Richard Li, and Creative Technology's Sim Wong Hoo - both bringing strong tech cred to the table.

In the next few years, its share price roller-coastered - hitting highs exceeding $1.70 but also lows of under 10 cents. Though prices plunged with the bursting of the dotcom bubble and tech stocks lost their shine, MediaRing still saw a number of sharp rallies sparked by market rumours of prominent persons or corporates taking a bigger stake in the company.

However, earnings, or the lack thereof, also began to be of concern, as did the fact that key shareholders, including Mr Sim and Mr Li, began to pare down their stakes.

But, MediaRing finally swung into the black in 2004, with US$0.4 million in net profit, versus the US$3.3 million net loss the year before. Since then, it has raked in net profits each year.

Its most recent stretch of high publicity as an active corporate play began in 2006, when MediaRing launched its bid to acquire Nasdaq-listed Pacific Internet, a regional telecommunications and Internet service provider. This marked the start of a drawn-out battle between MediaRing and PacNet's largest shareholder, Vantage Corp.

Trading volumes soared during that period, as punters reacted to each new twist in the PacNet saga. Eventually, MediaRing failed in its bid to take control of PacNet, despite raising its offer price per share from US$8.25 to US$9.50.

The boardroom battle became even more bitter after the offer failed and MediaRing bought shares on the open market raising its PacNet stake to 29.6 per cent, overtaking Vantage as the largest shareholder.

In January 2007, Vantage finally decided to throw in the towel, selling its stake, not to MediaRing, but to PacNet's third largest shareholder, the US-based fund Connect Holdings, which had launched an offer of US$10 a share.

Much speculation ensued over what MediaRing would do, but the firm accepted Connect Holdings' offer in June 2007, thus ending the lengthy tussle.

On the sidelines of the PacNet manoeuvring, MediaRing did in fact embark on three acquisitions, including Cavu Corp, a Singapore-based IT infrastructure services provider in 2007, which was to help diversify its revenue stream.

MediaRing has not been immune to the economic downturn. In its most recent financial report, for the second quarter that ended June 30, revenue declined 17 per cent to US$27.65 million from Q2 2008's revenue. But it still raked in a net profit of US$0.17 million compared with a loss of US$0.43 million in the same quarter last year.

Dr Modi now has big plans for MediaRing - to integrate the VOIP technology that it has been known for thus far with mobile telephony, and expand into major markets such as India, Indonesia and the Middle East.

More pertinent to shareholders and potential investors, the new management intends to set up a 'shareholder value enhancement committee', and aims to pay dividends, something it has not done so far. These comments of Dr Modi's were not to be taken as a profit forecast, the company later clarified on SGX.

Still, the intention to grow profits has been read positively by investors. Last Friday, one week on from the announcement, trading volumes had fallen to their usual levels, but its share price stayed up at 24.5 cents, some 36 per cent above the pre-announcement price of 18 cents. These latest developments should keep MediaRing in the spotlight for some while yet.