modu Ltd. has signed a exclusive contract with Lynk Communications to distribute modu mobile phones and modu jackets in the Philippines. The initial $38.5 million order will be delivered in the second quarter. The company made the announcement at the 2009 GSM Congress in Barcelona.
modu added that it will announce more distribution agreements in several other Southeast Asian countries, with 235 million subscribers, at a later date.
modu CEO Dov Moran said, "The one-size-fits-all model is - frankly - outdated, and modu helps Lynk Communications lean forward in a highly competitive market through mobile phones that change with the needs of their owners. Personalization is the future, and companies like Lynk Communications understand how to connect with people in a very relevant way."
The Lynk contract is one of modu's first distribution agreements. The company plans to begin production of its mobile telephones in April. modu also announced that Telefonica SA (NYSE; IBEX: TEF; LSE: TDE) will conduct a pilot of modu mobile phones in Mexico, Argentina and Chile. Telefonica has 150 million subscribers in 13 Latin American countries. The collaboration with modu is intended to broaden the choice of mobile phones available to consumers.
Moran told "Globes" that modu is not targeting emerging markets in Southeast Asia and Latin America. He said, "We're targeting developed countries."
Moran noted, however, that modu's first mobile phone used 2.5G networks that are more prevalent in emerging markets. "European operators want 3G mobile phones, which we'll produce next year."
Moran added that 2.5G was also more suitable for the Israeli market, where Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) will market modu phones. "Cellcom will be the first company in the world to market modu phone," he said.
Moran has lowered his forecast of $100 million in sales in modu's first year of sales, although he still predicts $1 billion in sales within a few years. Commenting on the Telefonica deal, he said, "Every contract with an operator is cause for celebration, and this is a customer with a huge market."
modu raised $85 million in late 2008 to meet expectations and production timetables. Although the company raised less than its $120 million target, Moran said, "This will suffice through 2010. I predict, however, that we'll raise more money soon to realize our expensive plans."
Moran decline to provide specifics about modu's fundraising plans, but did not rule out that they might take place soon. Qualcomm Inc. (Nasdaq: QCOM) recently invested $7 million in the company."
Published by Globes [online], Israel business news - www.globes-online.com - on February 16, 2009
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