TECH DEALS: Kondoot's growth aspirations

Aussie social media hotshot eyes a $10 million IPO, Optus' parent Singtel shakes things up and Leighton's undersea cable plan on the rocks.

Tech Deals is a weekly column covering the latest deals in one of the busiest sectors for M&A. To read previous articles go to our Tech Deals page.

Social media hotshot Kondoot goes public   

The social media phenomenon isn’t just about Facebook and Twitter and a couple of young guns from Brisbane, the brains behind Kondoot, just might have what it takes to become the next big stars in the sector.

In less than six months Kondoot has catapulted itself from a nifty idea to the hottest social thing in town and before we proceed any further let’s find out just what the fuss is all about.

Kondoot is a social live video network which takes the best features of Facebook, Livestream and YouTube to give its users the ability to record and publish live and record broadcasts and stay in touch through video chat and instant messaging. Founded by Brisbane-based university buddies Mark Cracknell, 21, and Nathan Hoad, 25, Kondoot started life eighteen months ago and has subsequently grown from strength to strength.

After a soft launch in Australia less than a year ago, Cracknell and Hoad really hit their stride in the US past December and the money just keeps flowing in. The pair got the ball rolling by tapping into the Australian Small Scale Offerings Board last year to raise $800,000 but then closed a $3.2 million funding round in the US. The success in the US has clearly emboldened Cracknell and Hoad to make another pitch to Aussie shareholders with Kondoot lodging a prospectus with the Australian Securities and Investments Commission (ASIC) with plans to raise $10 million. Kondoot is offering around 83.3 million new shares, under a prospectus of 12 cents each, with all applicants required to purchase a minimum of 16,667 shares.

While going public was always on the cards for Kondoot, most had expected an IPO to come around 2015. However, Cracknell and Hoad may have a couple of reasons that expedited the IPO process. The promising vibes from the US should have a positive impact on the planned IPO, which could see Kondoot valued a touch over $50 million and with Facebook’s blockbuster IPO set to take centre stage in a couple of months, the conditions for effectively selling the Kondoot message can’t get better than what they are right now.     

And it’s a message worth listening to, because the live social video phenomenon could be a new, lucrative vertical in the social media industry and right now Kondoot is just about the only outfit with a substantial platform. With subscribers from over 135 countries Kondoot needs to extend its presence as quickly and widely as possible before rivals make an appearance. If the IPO goes according to plan, Cracknell and Hoad will have the funding they need to spread into Europe and more importantly channel the product into more niche segments: the music industry and sports broadcasting.   

It’s fair to say that at $50 million Kondoot will be a potentially tasty morsel for some of the bigger fish in the social media pond. But for now Cracknell and Hoad will no doubt be focused on making sure that local investors like the Kondoot message as much as the folks in the US. 

Optus’s parent SingTel eyes mobile advertising space

Singapore Telecommunications Limited (SingTel) is expanding its presence into the fast-growing mobile advertising and marketing industry with its plan to acquire US-based outfit Amobee.

SingTel is paying $US321 million for the Silicon Valley-based outfit and the company said that it will partner with Amobee to build a strong independent company that will serve operators, publishers, advertisers and agencies with leading edge mobile advertising technology and services. Amobee's management team will remain in active control of the company.

The acquisition comes as Optus's parent company said that it will restructure the company into three business units from April 1, 2012 and interestingly one of the divisions will be run by Optus boss Paul O’Sullivan.

SingTel says that the new organisation structure has been developed to capture emerging opportunities as more customers gravitate towards mobility. Optus boss O’Sullivan will be in charge of the group consumer unit, while the Group Digital L!fe and the Group ICT divisions will be run by Allen Lew.

The news should reinvigorate talk that O’Sullivan may not be sticking around as Optus CEO for too much longer.  The speculation was ignited earlier this year after former Hutchison Telecoms Australia CEO Kevin Russell was appointed as the telco’s new chief operating office.

The talk was that Russell had been appointed as the heir apparent at Optus. The only obvious move for O’Sullivan is to take a much larger role within SingTel and this restructure could be just the ticket.

Gerry Harvey’s online gripe; steady hands at Living Social Australia  

Moving to the retail sector, Harvey Norman boss Gerry Harvey is evidently finding the online space a difficult nut to crack and just months after the launch of its brand new website the retailer is now set to scale back its plan to conduct five per cent of its trade online within two years.   

Harvey Norman posted a 2.1 per cent fall in its first half net profit last week and Harvey has told AAP that recent online trading figures have been from impressive. Instead of the five per cent figure online turnover is sitting at about 0.5 per cent of one percent and Harvey says that the retailer is revising down its target to between one and two per cent.

Major retailers have copped a lot of stick for being late in the online space and almost every single one of them right now is working to rectify that problem. The transition to a multi-channel model is not going to happen overnight and in Harvey Norman’s case be quite painful.  

Meanwhile, JumpOnit co-founder Adam Rigby has taken charge of US daily deals giant Living Social’s Australia and New Zealand operations, replacing fellow JumpOnit founder Colin Fabig.

Rigby and Fabig started JumpOnit a couple of years ago when daily deals were just starting to make waves in the retail market and it didn’t take long for Living Social to come in and pick up the business. The US outfit is a heavy hitter in the local scene right now and with Rigby now moving from a COO position to become CEO and Fabig moving to become chairman, the company has some steady hands at the helm as the local deals sector gets ready for some rationalisation.   

Leighton’s undersea cable plans on a knife edge

Leighton Holdings submarine cable connection between Perth and Singapore is reportedly on shaky ground as it still looks to entice major telcos to come onboard as customers. The 4,800 kilometre submarine cable system is being built by Australian Submarine Cable (ACS), a subsidiary of Leighton, which announced its plans in May last year. However, since then it has failed to grab the attention of any telcos that might be interested in becoming a customer. What’s worse is that a number of them have told The Australian Financial Review that they are far more inclined to latch on the network being built by Huawei Technologies-backed ASSC-1 Communications Group. ASSC-1 has already bagged Telstra as a foundation customer and if the likes of iiNet and Amcom follow suit then it could be curtains for the Leighton Communications Australia-Singapore Cable.

Fairfax’s content streaming aspirations and other news

In the media sector, Fairfax Media boss Greg Hywood has told the AFR that the company is mulling plans to get its content streaming on internet-enabled televisions by the end of the year. Hywood said that Fairfax is in talks with leading television manufacturers LG and Samsung about installing applications on new TV models. Given that IPTV take up is on the rise in Australia, it’s no surprise that Fairfax is interested in the getting its content onto screens as quickly as possible. Meanwhile, Internet service provider iiNet Ltd will launch an NBN satellite service later in March with plans to offer customers packages with speed of six megabits per second and NewSat has finalised its agreement with MEASAT Satellite Systems for the lease of satellite capacity for Jabiru-2. 

Elsewhere, Sydney-based tech company Roamz has officially launched the latest version of its location-based app, which acts as a personal tour guide to tell users about local places and activities that interest them. The mobile social platform also allows retail and tourism businesses to engage with customers interactively through their mobile devices. Roamz was named in BRW’s list of Top 10 Startups to Watch for 2012 last month and the company has reported 60,000 downloads of its app and has made over one million recommendations to its users since its launch in October 2011. 

In other news, HP has signed a six year, multimillion-dollar tech outsourcing agreement with engineering firm Downer EDI to manage the company’s technology and innovate its systems. As part of the deal, HP will build manage and host Downer’s technological infrastructure in during the company’s rapid growth.

The Queensland Government has selected Talent2 International Limited as its ICT Contractor Resource Manager. Under the three year contract, Talent2 will implement and manage a Managed Service Program across all 13 Queensland Government agencies.

US-based snom technology has expanded its strategic relationship with its Platinum-level partner in Australia and New Zealand, Alloy Computer Products. AlloyCP, the company's US subsidiary, is now an official snom’s US distributor. AlloyCP will distribute snom’s full portfolio of business VoIP phones, IP PBX solutions and UC- enabled endpoints to its North American network of value-added resellers (VARs), network service providers and system integrators from it sales office and warehouse facility in California.