Mobile tech firm to go shopping

THIS will likely be a busy year for Macro Kiosk Bhd. After a consolidation pause in 2007, the mobile messaging technology company, a 70% subsidiary of the main board's Goldis Bhd, is ready for another growth spurt. This time, it plans to go shopping instead of relying on organic development.

This will be the eight-year-old company's second phase of expansion. The first saw it venturing to nine countries in the region at an accelerated pace. The plan had been for MacroKiosk to take 36 months to do so. In the end, only about two years was required.

Besides Malaysia, the company has a physical presence in Brunei, China, Hong Kong, Indonesia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

MacroKiosk operates its own mobile messaging gateway, which connects its customers to more than 360 mobile operators in some 100 countries. Other than players in the mobile industry, financial institutions and marketing and promotion companies are among those who can leverage on the company's services to reach a wide audience.

The Goh brothers – Kenny is the chief executive officer and Henry is the chief operating officer – are convinced that the mobile messaging market is still nowhere near maturity, and now is a good time to scale up the company.

Henry says the company needs to speed up its growth and that is why it has opted to acquire existing businesses. “Last year was more for us to stabilise and digest the regional expansion we had undertaken. Most of the overseas operations are already starting to bear fruit,” he adds.

“We resume our expansion this year. We have grown organically in our first phase. We set up companies, hired people and stuff like that, which was a tedious process.”

MacroKiosk is considering acquiring two types of targets – companies that are also in its core gateway business and those in fields that can offer synergies with that main business. The plan is to buy at least one business in each category for every one of the 10 countries in which MacroKiosk is operating.

However, the Gohs do not rule out acquisitions in other locations. “We have our benchmark, but we will not limit ourselves if opportunities arise in other countries,” says Henry, who adds that the company is already working on a few prospects.

The aim of the first thrust of the acquisition strategy is to strengthen the gateway business operations in the 10 countries.

The second prong is called the synergistic business diversification (SBD) programme. Says Henry: “We are looking at businesses that provide us with synergistic development. These could be media companies or anything that will give us a new source of revenue and at the same time, complement and synergistically build our core business.”

Kenny adds that MacroKiosk prefers to acquire companies whose founders are still running the show. “We always believe in entrepreneurial skills and passion. We don't fancy buying a company whose founder has already exited,” he explains.

The plan to buy a minimum of 20 companies sounds ambitious for a company as young as MacroKiosk, but it has had some experience in this aspect.

In March 2006, it acquired 60% of Eluxion Media (M) Sdn Bhd, an interactive multimedia production house for RM72,000. Kenny says this move was a diversification that will help MacroKiosk gain entry into the mass media industry.

In March last year, MacroKiosk bought PT Permata Cipta Rejeki, an Indonesian company that is also in the mobile gateway business.

“This (the two acquisitions) has created some momentum. And now in 2008, we are putting our heads down and we are pushing towards these two new growth areas,” says Henry, who adds that the second expansion phase will be financed by internally generated funds and if necessary, borrowings.

“We have positive cash flow and we should be able to pay the acquisitions. We're not looking at putting in a lot of money to acquire a huge company. We are targeting companies with potential and those that we believe can grow stronger under our wings.”

Another step to prepare MacroKiosk for the acquisition spree was the formation of a corporate affairs department at the end of last year.