MoMo shoulders mounting losses for larger market share

Nov 19th at 13:26
19-11-2018 13:26:57+07:00

MoMo shoulders mounting losses for larger market share

The accumulated losses of MoMo, the e-wallet and payment app of M-Service JSC, has increased to nearly VND600 billion ($26 million), catching up to Tiki and Shopee.

In order to ride the waves of the non-cash payment trends, intermediate payment services and e-wallets have received great investments recently. MoMo is one of the first e-wallets in the market, and as such has received ample investment.

E-payment is quite a promising sector, but it seems to “burn” a great deal of money to lure in new clients and launch promotion campaigns for competition.

Thus, as MoMo develops and expands, the more losses it has to suffer. The company’s losses rose to VND243 billion ($10.6 million) in 2017 adding to the VND147 billion ($6.4 million) in 2016 and VND43 billion ($1.87 million) in 2014. Thereby, as of the end of 2017, MoMo’s accumulated losses stood at VND566 billion ($24.6 million), equivalent to the losses of Tiki and close to Shopee.

In 2017, MoMo’s revenue was VND1.734 trillion ($75.4 million), but gross profit was only VND34 billion ($1.48 million), which resulted in a 2.1 per cent gross profit margin, while it spent approximately VND300 billion ($13 million) on sales and management costs. Thereby, with the modest revenue and low profit margin, MoMo will not be able to turn profit in the short term.

One of MoMo’s disadvantages compared to competitors is that it does not belong to any large retail system, so it has to build and maintain its own user database. Meanwhile, its competitor Zalo Pay is developed by VNG Corporation, which has an established online gaming system, social network Zalo, and affiliated company Tiki.vn, while AirPay has access to the database of SEA (Garena) Corporation, including its online gaming system, e-commerce platform Shopee, and food delivery application Now.

Thus, as opposed to MoMo, some of e-wallet companies, such as Payoo and AirPay, have managed to turn profit. In 2017, the revenue of Vietnam Esports JSC, the developer of AirPay, was nearly VND4.2 trillion ($182.6 million) and its pre-tax profit was VND67 billion ($2.9 million).

Although the losses are increasing, MoMo receives ample investment. In 2013, MoMo mobilized $5.75 million from Goldman Sachs and another $28 million from Goldman Sachs and Standard Chartered Private Equity (SCPE).

Since early 2018, MoMo seems to receive investments from foreign investors as is apparent from the several instances its business registration was changed, increasing charter capital from VND69 billion ($3 million) to VND112 billion ($4.87 million).

At the end of 2017, foreign investors held only 44 per cent of MoMo’s charter capital. However, by now, this ratio has increased to 64 per cent with some new names like Ganymede Holdings B.V and E-Mobile VN Investments I.

vir



NEWS SAME CATEGORY

Better control of imports-exports needed to shelter VN from US-China trade war: seminar

Authorities should closely monitor the import and export of goods for origin to prevent customs declaration fraud, a seminar heard in HCM City on Friday.

‘Impact investing’ in VN creates social impact as well as financial growth

Investors, business and finance leaders, and representatives of family offices and foundations took part in a discussion in HCM City on Nov 16 on impact investing...

Ha Noi, HCM City spend VND47 trillion for Tet goods

Industry and trade departments in Ha Noi and HCM City are planning to spend VND28.5 trillion and VND18.4 billion, respectively, to prepare goods for next year’s Tet...

Vietnam to attend Novartis regional stakeholder event in Singapore

Building on the series of global stakeholder dialogues, Novartis Social Business will be hosting its fourth event in Singapore on November 20, 2018.

Saigon Hi-Tech Park attracts AI projects

Twenty-one local and international experts shared research results on robotics and artificial intelligence (AI) technology at the Saigon Hi-Tech Park 5th...

Uncertain funding at Vinaconex auction

Three companies and one individual registered to buy the entire share volume put on offer by Vietnam Construction and Import-Export JSC (Vinaconex) that is valued...

Transfer of State capital ownership in 19 SOEs to mega committee completed

The transfer of State capital ownership of 19 State-owned enterprises (SOEs) to the State Capital Management Committee was complete after the committee received...

Viet Nam-Korea trade up but deficit grows

Over the past 25 years, the economic ties between Viet Nam and South Korea have flourished, but the trade imbalance between the two countries has reached an...

Thanh Hoa plans aviation complex

FLC Group will build a complex of commercial aviation services, tourism resorts, industrial sites and hi-tech agriculture in the central province of Thanh Hoa’s Tho...

Japan, VN to deepen cooperation in the new global context

Japan and Viet Nam should deepen bilateral co-operation, not only in investment and trade but also work to improve relationships in the future, Director of the...


MOST READ


Back To Top