MGM Wireless share price jumps 17% on Vodafone agreement

The MGM Wireless Limited (ASX:MWR) share price charged higher today on the back of a sales agreement with Vodafone Australia.

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The MGM Wireless Limited (ASX: MWR) share price was a strong performer on the market today, recording a 16.67% gain on the back of a sales agreement with Vodafone Australia.

MGM Wireless designs and develops technology, software and wearable devices to enhance communication between families, schools, and society.

The company’s multichannel communication solutions enable schools to communicate with parents and caregivers using their preferred medium. These solutions are used by more than 1,400 schools and 1.7 million parents.

What moved the MGM Wireless share price today?

This morning, MGM Wireless announced it has entered into a sales agreement with Vodafone Hutchison Australia, which is now trading as TPG Telecom Limited (ASX: TPG) following its merger with TPG.

Under the agreement, the mobile network operator will sell MGM’s Spacetalk smartwatches in Vodafone retail stores from as early as August 2020.

Spacetalk is a children’s smartwatch sold in Australia, New Zealand and the UK through leading retailers like Officeworks, JB Hi-Fi Limited (ASX: JBH), and Kogan.com Ltd (ASX: KGN). 

MGM Wireless describes the device as an “all-in-one smart watch, phone and GPS for kids aged 5-12”. Customers manage the Spacetalk watch by downloading the company’s AllMyTribe smartphone app, which requires an ongoing monthly in-app subscription.

Vodafone will be the first Australian telco to sell Spacetalk through its retail footprint. It will offer Spacetalk with its ‘Red Wearable’ plan for a monthly plan fee. Globally, operators Sky Mobile in the UK and Spark New Zealand Ltd (ASX: SPK) offer a similar set up.

Management commentary

Commenting on the agreement, chief executive Mark Fortunatow said:

“We are delighted to have signed this Agreement with Vodafone. For the first time, Australian parents will be able to purchase SPACETALK with a mobile plan for one affordable monthly fee. It’s a simple, one-stop solution to keep kids safe and families connected.”

Vodafone head of devices, Ian Walls, also shared his thoughts, saying:

“The SPACETALK Watch is a natural fit for Australian families and we are proud to be the first Australian Telco to partner with MGM Wireless to bring this innovative device to the market.”

How has the Spacetalk smartwatch been performing?

Since launching on a single online portal in 2017, Spacetalk’s distribution channels across Australia and New Zealand has expanded to 777 stores as at 31 December 2019.

Wearable Spacetalk revenues recorded sizeable growth in the first-half of FY20, jumping 140% from $2.64 million in the prior corresponding period (pcp) to $6.34 million. Within this segment, Australian and New Zealand revenues grew by 94% on the pcp, while UK sales added a further 46% growth to overall Spacetalk revenues.

Additionally, AllMyTribe monthly app subscriptions increased to $130,000 in March 2020. This was a new monthly record and represented quarter-over-quarter growth of 19%.

Including today’s jump, MGM Wireless has a market capitalisation of just under $20 million. If you’d rather invest in much larger and more liquid companies, don’t miss the top ASX growth shares in the report below.

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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