Mobile payments firm Bango (BGO:AIM) is to team up with BT (BT.A) to help power the telecoms giant’s bundled subscription services. Subscriptions are seen as a key tool for BT to deliver a range of third-party products and services to its customers and open-up greater entertainment and commerce opportunities for it.
BT has the UK’s largest fixed-line and mobile customer base across its BT, EE and Plusnet brands, with approximately eight million broadband and 14 million mobile customers.
OODLES OF CONTENT
Strategic content and technology partners include Amazon, Netflix, Apple, Samsung, Nest, Stadia, Xbox and BritBox, recently launched by the BBC and ITV (ITV). Bango’s BT partnership will kick-off with the BritBox digital video service, offering BT customers a six-month free subscription.
‘This new merchant partner [BT] flagged a global roll out earlier this year, a further opportunity for Bango’, said FinnCap analyst Lorne Daniel on Wednesday.
The new development saw investors chase Bango shares nearly 8% higher in morning trade on Wednesday to 164p. The Cambridge company’s stock has rallied more than 40% in 2020.
Shares in FTSE 100 constituent BT drifted 1% to 99.88p.
BATTLE FOR THE BILL
FinnCap believes that Bango’s direct carrier billing platform (DCB), which adds new services payments to the users monthly broadband or mobile bill, is becoming ‘cornerstone technology’ in the rapidly growing global market for subscription-based entertainment.
‘This now includes virtual gym memberships and food clubs, as well as video, music and game-streaming subscriptions’, the analyst said.
‘Merchants providing these services use Bango for speed-to-market, global deployment and data insights to target their marketing to find more paying customers’.
Bundling multiple services is becoming an increasingly powerful tool in the ‘battle for the bill’, helping to win new customers and to keep those it has loyal.
TOO EARLY TO PREDICT FINANCIAL IMPACT
‘At this stage we make no changes to forecasts or our 225p target price’, said FinnCap’s Daniel, but added that ‘we are encouraged to see Bango’s developing partnership with BT and this deal demonstrates the scale of opportunity ahead’.
FinnCap is currently forecasting earnings before interest, tax, depreciation and amortisation of £3.4 million this year to 31 December on £12 million revenue.
That implies pre-tax profit of £0.9 million and earnings of 1.3p per share, putting Bango shares on a 2020 price to earnings multiple of 126.
