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Home / Business / Companies / Telecommunications

Plus SMS shareholders forced to sit tight

Owen Hembry
By Owen Hembry
Online Business Editor·
5 Sep, 2006 10:15 AM3 mins to read

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Shareholders stunned by the collapse in the market value of Plus SMS Holdings are sitting tight in the hope the text message marketing firm can still be a winner.

Plus SMS, which plans to sell single mobile codes to companies for global text message campaigns, said last week that it
would not generate revenue this year.

The postponed income prediction came on the day both founder Garry Donoghue and chairman Jim Bracknell resigned and the company admitted statements it had issued about the progress of the business were wrong.

Auckland-based investor Paul Bramley, who has more than 100,000 shares in the company, said shareholders he had spoken to were hugely disappointed.

"Considering what we were told at the annual general meeting [in June] that things were happening and they were getting confirmations of these contracts, they were going to list on the AIM board [at the London Stock Exchange] - all these things we heard."

Chief executive Christopher Tiensch said last week that he was positive about the commercialisation potential of the concept and the firm would continue with its ambition to list on the AIM market.

However, Bramley said the stock was now a longer-term prospect.

"I think most of the [shareholders] I've spoken to are certainly sitting tight - and in actual fact what more can they do?"

Despite the troubles the concept was still excellent, Bramley said.

The share price has dropped 24c since Friday's warning, closing yesterday at 10c - cutting the market capitalisation of the firm from $117.9 million before the warning to just $34.67 million.

IDC telecommunications analyst Chris Loh said Plus SMS was operating in a global market for mobile services that was very lucrative and developing, particularly on the back of high band-width 3G networks.

"Conceptually [Plus SMS] laid a platform for services which crosses borders so it does sound quite appealing," Loh said.

"It's extremely fertile [ground] but a lot of things are still playing out and maybe this is just another example of there's a lot of change underway [and] not all players are stable."

Loh said there had been scepticism within the mobile developer industry about the viability of Plus SMS.

"They find it hard to see how [Plus SMS'] market capitalisation was so large on the back of the fact ... they don't have established a track record, they don't have revenue coming in, they don't have products [and] they don't have clients."

Plus SMS said last week that a contract with Telecom for the exclusive use of number ranges for the distribution of messages worldwide was still valid but was yet to result in a commercial deal.

Telecom did not return calls to answer questions on the nature of the contract yesterday.

International television and sports rights management company ISTV had organised two deals which fell over because Plus SMS could not deliver the numbers.

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