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Euronet acquires processor of mobile phone top-ups in Spain

Thursday 4 November 2004 18:32 CET | News

Euronet Worldwide has closed the acquisition of the Movilcarga Division of Grupo Meflur Corporacion (Meflur), a Spanish telecommunications distribution company. Euronet will own 80% of Movilcarga and Meflur will own the remaining 20%.

Movilcarga is a provider of electronic prepaid voucher solutions in Spain. Movilcarga has a distribution agreement with Telefonica, the largest mobile operator in Spain, which services 52% of that countrys mobile telecommunications market. The company plans to expand its top-up services with additional mobile operators in Spain. Meflur is one of the largest European wholesalers of telecommunication services and products, and one of the largest independent wholesalers and distributors in Spain. Meflur, with headquarters in Monzón (Huesca) in Northern Spain, was successful in leveraging its mobile operator relationships together with its other distribution businesses to develop the mobile phone top-up business. Meflur will retain 20% of its interest in Movilcarga and actively participate in the continued growth and development of Movilcarga. From its creation in 1996, Meflur has grown rapidly and has branched out from its activity in Spain to certain Latin American markets. In 2004, according to Movilcargas unaudited financial information, the top-up business has experienced transaction growth of approximately 8% percent per quarter. Based on its most recent three-months unaudited financial information, Movilcarga generated net revenue, on a recognition basis consistent with Euronets other prepaid processing revenues, of approximately $3.5 million. Under the Movilcarga acquisition agreement, Euronet will hold 80% of the shares of an acquisition entity that is purchasing the Movilcarga assets for €18.0 million (approximately $22.9 million) in two installments: €8.0 million in cash at closing and €10.0 million in cash to be paid in March 2005, subject to certain revenue targets and adjustments. An additional payment may be due on November 4, 2006, subject to the fulfillment of certain financial conditions. The additional payment, if any, is payable, at the option of Euronet, either in cash or a combination of cash and common stock of Euronet. All of Movilcargas employees will be retained to continue operations, sales, development and customer service activities in Spain. Movilcarga is one of several relatively similar sized top-up providers in Spain. Spain, with a population of 40 million, is the fourth largest prepaid market in Europe. According to mobile operator data and EMC, a leading research group, approximately 55% percent of the 37 million mobile phone subscribers use prepaid services. Euronet expects that Movilcarga will contribute approximately $0.05 per share to its fully diluted earnings per share for the year 2005. This estimate is subject to refinement, if any, resulting from purchase price allocation and the related amortization, and it is based on current and projected financial performance of Movilcarga, as determined from financial information provided in the transaction.


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Categories: Payments & Commerce | Payments General
Countries: World
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