Wireless software developer Jumbuck is soon to become a fully owned subsidiary of multimedia firm Q Multimedium (QMM) after announcing the sale of its remaining 50 per cent share.
QMM will use the acquisition to establish a presence in the infantile global markets for GPRS and 3G technology. In return, Jumbuck will gain access to QMM's multimedia project skills to continue developing wireless applications for the mobile market.
Jumbuck will receive 12 million QMM shares (currently trading at $0.11) plus $60,000 and five million options exercisable at $0.30 per share at any time within three years from the date of settlement.
The merger will allow QMM to offer Java development, hosting and wireless content creation using Jumbuck's back-end wireless infrastructure and enterprise software development. "The real revenue in WAP will be entertainment like media-rich games and wireless chat, which are already converting to 3G," says Adrian Rischmueller, Jumbuck CEO.
QMM CEO Jim Kennedy says it may be two or three years before WAP becomes a mainstream tool but the end result will be a mobile TV. He feels the standardisation of a platform, be it Imode, which is currently used in Japan or WAP chosen by Australia and the US, will significantly accelerate the process.
According to Kennedy, telcos will be the primary drivers for WAP and 3G as they attempt to recoup revenue on the hefty licensing fees. Jumbuck already generates revenue from three major international telcos after securing a deal with Telstra last year to supply its WAP-based chat room services to mobile phone subscribers. The developer holds a similar contract with US carrier Sprint PCS which receives about half a million hits per day - more daily WAP traffic than the total amount of traffic in Australia. In addition, negotiations are underway to enter a long-term contract with one of the largest international mobile telcos.
Currently, over 15 million mobile phone users worldwide have dedicated access to Jumbuck WAP chat rooms where they are generating in excess of 5.5 million minutes per month. The sale will help the developer realise its aspiration to move into the WAP/3G advanced Asian markets. The company will use QMM's Singapore office as a shop front to gain a visible presence in the region.
The acquisition is subject to shareholder approval, however if it proceeds QMM expects it to be complete by March 31. Rischmueller will take a seat on the QMM board.
Meanwhile, QMM has undertaken a revenue-raising initiative with Dicksons Ltd to raise $1.87 million. The company was cash flow-positive for December 2000 and is forecasting a positive cash flow for the six months to June 2001, followed by a profitable year ending June 2002.