Mercom Capital Plc Investment in Mobile Wireless and Satellite SAPI (7508M)

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RNS Number : 7508M

Mercom Capital Plc

17 October 2016

17 October 2016

Mercom Capital Plc

("the Company")

Investment in Mobile Wireless and Satellite SAPI

The Directors of the Company are pleased to announce that the Company has agreed to invest GBP600,000 for a 16% interest in Mobile Wireless and Satellite SAPI ("MOWISAT"), a newly established Mexican company in the financial technology and payments industry. MOWISAT intends to be the first provider of fintech solutions for unbanked communities in Mexico which it plans to deliver as a mobile virtual network operator ("MVNO"). To that end, MOWISAT has executed a Letter of Intent to offer such services on an exclusive basis through a nationwide commercial and retail distribution network with over 25,000 outlets with a reach of approximately 40 million people in rural areas as well as the outskirts of every major city in Mexico. MOWISAT plans to deploy its financial services offering as described below in the first quarter of 2017. In due course, the Company will launch in similar rural markets in other countries of Latin America.

The Mexican cellular market has around 109 million subscribers, around 84% of which are on prepaid packages. Mobile penetration is approaching 89% with average ARPU across the market of approximately US$12. The new Mexican Telecommunications Regulation (Ley Federal de Telecomunicaciones y Radiodifusión), which became effective in the second quarter of 2014, opened up a variety of business opportunities for MVNOs which currently have an aggregate market share of approximately 0.8%.

MOWISAT's technology will enable the company to provide a highly differentiated "one stop shop" financial services offering covering micro lending, debit/credit cards, payment systems, affordable remittances, e-commerce and payment platforms (e-wallet). The deployment of the company's services will be in collaboration with one of Mexico's leading banks which currently offers online banking services and has the resources to handle over 50 million online bank accounts. In addition, the company will provide access to its platforms to other complementary fintech solutions.

Founder MOWISAT shareholder Guillermo Zambrano Martinez, of Lottus Capital Partners (a private equity firm specializing in growth oriented companies) and his team have initiated a series of collaborations to further enhance and differentiate the business model of MOWISAT.

The Universidad de Guadalajara has recognized this unique offering and will be promoting MOWISAT's services to all its students who number approximately 16,000.

MOWISAT's experienced management team includes Davide Ferri as COO. Mr Ferri has been in the telecoms industry for over 16 years and for more than a decade has focused on Mexico as a founding partner of Aircrowd SA de CV. Aircrowd is a provider of development platforms and services for MVNOs and MNOs. Its services to its telecoms clients include bulk SMS platforms currently handling over 10 million messages per month. Mr. Ferri will be fully focused on MOWISAT's operations. The relationships that MOWISAT's senior management has historically built in the market place will be an added asset for the company.

Mercom's CEO John Zorbas commented: "This investment in MOWISAT is the first we have made since shareholders approved the change to our investing policy to include financial services and financial services technology. We believe the market in Mexico will be very receptive to the introduction of fintech solutions over an MVNO model. MOWISAT management understands both the technical needs of the financial service industry and its interface with the MVNO model. Considering the technological advances and the rapid growth of cellular connectivity that has occurred in recent years, we believe this is a great opportunity to shape and lead an industry."

"In due course, the Board anticipates making further investments in the financial services and financial technology sectors and to that end will look to raise additional equity from investors to supplement the Company's cash resources following the investment in MOWISAT. For this reason, on 10 October the Directors convened a General Meeting to be held on 27 October to seek new authorities to allot shares for general purposes and on a non pre-emptive basis."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

For further information, please contact:

 
 Mercom Capital Plc 
  John Zorbas                     001 416 504 3978 
 
   Northland Capital Partners 
   Limited 
   Nominated Adviser and 
   Broker 
   Edward Hutton / Matthew 
   Johnson                         [phone] 
 
   Beaufort Securities 
   Limited 
   Joint Broker 
   Elliot Hance                    [phone] 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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October 17, 2016 11:53 ET (15:53 GMT)