modu in talks on handset launch

The company plans to launch in Italy, Russia, and Japan.

29 May 08 16:1, Batya Feldman

It's not easy to call modu Ltd. a start-up. Although the company founded by Dov Moran has been in existence for less than two years, it has been rushing forward at a furious pace. The company also employs 160 persons and has attracted interest among mobile operators worldwide. The rate of growth is both exhilarating and scary because the risk of disappoint grows in proportion with the rise in expectations.

modu's rate of growth can be seen in some of its financial moves. Sources inform ''Globes'' that, a few weeks ago, one of Europe's largest cellular operators sent a group of top executives by private jet to the company's offices in Kfar Saba. At the end of the meetings, the operator promised modu that if it chose them, it would invest €200 million in launching modu's handset. It is superfluous to note that every telecommunications equipment start-up fantasizes about such an attitude from what is considered a tough and even tight-fisted customer.

The sources added that, in recent months, modu has signed a number of agreements with Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and that it also speeding up the marketing processes for its handset. By year-end, modu plans a three-nation launch in Italy, Russia, and Japan. Modu will give the communications operators exclusivity in reach geographical region. It should be noted that modu's Japanese launch will be earlier than originally planned because of the intense interest by the country's cellular operators.

modu's latest moves include the setting up of a factory and local office in South Korea, which will serve as the international design and production center for the handsets. modu is manning the center, which already has 15 employees, with top local industrialists. The company is also in the process of setting up an office in Europe, which will be headed by a former Samsung executive for Eastern European operations.

This rapid pace of activity needs a lot of money. modu is in the final stages of raising $100 million. This large amount of capital is intended to enable the company to move onto the sales stage. The company is not prepared to discuss the matter.

modu VP strategy and sales Zachi Weissfeld told "Globes" that the company was now investing in comprehensive market research to find out what end-users want. "More than 100 users in Russia have checked the handset and we got very good responses from them," he said. modu chose Russia because it is about to become one of the first countries where the handset will be launched and because it has a high cellular penetration rate.

For his part, Moran will only say, "modu isn't an ordinary start-up, and the responses we're getting from the market are favorable."

Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2008

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