Ann: Commentary on Appendix 4C-ICU.AX, page-6

I got carried away with the emerging market mobile hype when buying ICU.

The more I think about what they are actually selling in their Digital Services division, the more I think it offers very little value to the customer. For example, the profit margins for the celebrity content that they push are almost 100%, do you think that celebrities would be giving this away for nothing if it was really worth anything?

It is hard to get a clear grasp of exactly what the product is that they are selling (a major reason why I should not have purchased in the first place) but from what I can tell it is the type of stuff that is freely available on line (generic games, music, ringtones, short interviews with celebrities). If I were to accidentally sign up for these services and then discovered some weeks later that I was being billed on an ongoing basis then I would complain too.

When I first bought shares in ICU I thought I was buying a business earning profits of $1m per year before the contribution from Arte which would add another $2m. A year later and I'm looking at a normalised npat of under $1.5m. Depending on how quickly they can get Malaysia back on track (if they can at all) then next year's profit could be lower still as the content suspension didn't start until early April. Hopefully growth in Indonesia more than offsets any impact.