050207: Fugen Marketing goes into 'texting' business

By Dennis D. Estopace

Reporter

FUGEN Marketing Inc., a wholly-owned Filipino manufacturer of herb-enhanced coffee, has ventured into the network marketing business on the short messaging service (SMS) platform of mobile phones. “We want consumers to start earning, and upend the pyramid,” Fugen executive Ricky Torres Jr. told reporters. Torres explained that his company aims to make some of the 42 million mobile-phone users who exchange SMS—popularly known as texting—earn as quasi-dealers and retailers of electronic load, or the monetary unit used in making calls and sending SMS. Some 200 million to 250 million text messages are sent daily. Business from prepaid e-Loads alone amount to over P80 billion a year, according to Torres. He did not cite the source of his numbers. Torres explained that consumers are at the bottom of the pile when it comes to making money in this system of business, while telecommunication firms, dealers and retailers of prepaid load make good bucks out of the whole scheme. Torres cited Smart Communications Inc., which has only 800,000 retailers selling to nearly 20 million prepaid subscribers. According to parent Philippine Long Distance Telephone Co.’s 2006 financial report, the combined number of subscribers of Smart and PilTel increased by 3.776 million or 18 percent to 24.175 million. PLDT said text messaging contributed significantly to the revenue growth in Smart’s cellular data service in 2006, generating revenues of P34.403 million, or 12-percent increase over 2005. Globe, on the other hand, registered 15.7 million wireless subscribers, saying that only 4 percent of these are post-paid users. “We’re eyeing to get a slice of this huge market,” Torres said. Encouraged by the numbers, Torres and his group have put up a new company called MBFII to get a slice of the text messaging pie. MBFII plans to sell membership cards at P2,888 each. A membership  comes with 50 retailer’s cards at P100 each. The card allows buyers to sell or transfer electronic loads to any telecommunications network using his existing Subscriber Identity Module, or SIM card. He gets a 10-percent retained load in his electronic wallet for every retailer’s card sold. The member gets additional peso points if he can get 10 members in two weeks. Based on their computation, Torres said sellers of their products could earn up to P16.7 million in five months if their “down-line” consumes P30-worth of SMS a day. MBFII members, compared to competitors, could reach up to ten and are also allowed to sell other products like its coffee or chocolate herb drinks. Likewise, the firm is open for a franchise investment worth P65,000, allowing the buyer to become a franchisee. Torres told BusinessMirror they invested P2 million, including purchase of hardware and development of the firm’s computer infrastructure. MBFII is a relatively new company “but we’re optimistic because mobile phone loads have become a necessity, like food and shelter, to many Filipinos,” according to Torres. The firm, registered in November last year with the Securities and Exchange Commission, could also sell Internet access cards and consumable products on wholesale and retail basis. The documents submitted by the company to the SEC said five directors, including Torres and his wife Fely, put up P1 million as MBFII’s authorized capital stock. The company operates beside Fugen’s manufacturing plant on Chino Roces Avenue Extension, Makati City. Its secondary purpose is to engage, manage and operate Internet services and computer services, on-line store services, and telecommunication value added services. “It’s time to earn while you text,” Torres said. According to a Research and Markets report, mobile operators worldwide face increasing pressure on profitability as voice revenues continue to fall. “Over the last three or four years mobile network operators have been focusing much of their attention on driving the all-important ‘data-as-a-percentage-of-revenue’ metric,” the report said. “In highly competitive markets, voice revenues are being squeezed harder than ever, churn is a constant problem and most operators are pushing nonvoice service revenues as the savior of ARPU [average revenue per user].”

 

http://www.businessmirror.com.ph/05022007/companies03.html