MGM Wireless signs Spacetalk deal with New Zealand’s largest telecommunications provider

MGM Wireless ASX MWR Spacetalk Spark New Zealand
Spark New Zealand will sell Spacetalk in each of its 73 retail stores as well as online.

Technology company MGM Wireless (ASX: MWR) will sell its all-in-one children’s mobile phone, smart watch and GPS tracker in New Zealand after finalising a deal with telecommunications giant Spark.

Spark New Zealand (ASX: SPK), a company with a market capitalisation of $6.65 billion, will sell the wearable device known as Spacetalk in each of its 73 stores and online from November 14, which marks MWR’s international debut after posting strong sales in Australia during the past 12 months.

The market has responded overwhelmingly to Spacetalk’s growth, together with the release of constant new features, by sending the MGM Wireless share price up from 37.5 cents on November 21, 2017 to trade at of $3.59 on November 5, 2018.

The agreement with Spark marks another milestone for MGM Wireless, which, from a standing online sales start 12 months ago, has taken Spacetalk to more than 270 leading bricks and mortar outlets across Australia and New Zealand.

With MGM Wireless expanding internationally, company founder and chief executive Mark Fortunatow said, “We are tremendously excited to add our first international mobile network operator to our growing network of bricks and mortar distributors.

“Further, we see it as a huge endorsement by a leading international telco of the calibre of Spark. Thanks to Spark, New Zealand parents will now be able to go to any one of its 73 stores across the country and see, touch and feel our revolutionary kids watch and GPS wearable device.”

“Our company continues to receive significant interest from other distributors and mobile cellular network companies in Australia and abroad.”

The Spark New Zealand agreement comes hot on the heels of another deal with consumer electronics giant JB Hi-Fi, which has agreed to sell Spacetalk in 197 stores across Australia from this month. JB Hi-Fi will also continue to sell Spacetalk online.

Last week MGM Wireless announced it had signed a preferred supplier agreement with Leading Edge Computers, which will sell Spacetalk in 120 outlets across Australia.

The agreement follows positive Spacetalk sales from an initial group of 12 Leading Edge stores, which commenced stocking in July 2018.

Spark’s digital services spokesman Michael Stribling says a recent study conducted by Spark found that nearly 90 per cent of parents wanted to “keep connected with their children, to ensure they were safe, when they weren’t around”.

“While the ability to stay in touch is a huge element of what makes the kids’ watch appealing, Spark’s study also found 75 per cent of Kiwi parents are concerned about their child’s safety on a day-to-day basis and over half of Kiwi parents agree that technology can be used to keep their child safe,” Mr Stribling says.

Bumper Spacetalk sales

Mr Fortunatow says more than 5000 Spacetalk watches have been shipped in past two weeks to more than 270 leading bricks and mortar retailers in Australia and New Zealand ahead of the high volume Christmas sales period.

MGM expects to ship a further 15,000 Spacetalk devices during November and December to cover peak Christmas demand.

Mr Fortunatow added that 8300 Spacetalk units were sold in first 12 months, generating revenue of $1.9 million, excluding recurring app revenue to MGM’s online store (www.allmytribe.com). Also that the recent release of new screen protector and battery charging kits should add a further 4 % to 7 % to overall Spacetalk revenues.

Based on existing sales, feedback and research, Mr Fortunatow says the market for Spacetalk is likely to be larger than initially expected and in the vicinity of between 120,000 and 180,000 units per annum in Australia alone, or $30 million to $60 million a year. Stating that technology market research firm Gartner supports MGM’s forecasts.

Spacetalk sells for $349 in Australia and includes a 12-month warranty. It will sell for NZ$399 in New Zealand.

In a significant first, Spark will offer Spacetalk bundled with a SIM for less than NZ$25 on a 24-monthly plan, removing upfront cost as a potential barrier to purchase.

What is Spacetalk?

Spacetalk is barely a year old, but it has rapidly gained widespread community appeal as the wearable device enables parents to see precisely where their children are via a mobile phone app from www.allmytribe.com.

If the child needs help, a special SOS alert function can be customised to call parents and other guardians. The child can make or receive calls and text from a list of contacts parents choose.

What also appeals to parents is Spacetalk prevents access to the dangers of social media apps and the Internet.

Parent Brooke Calo, said Spacetalk provides her with peace of mind. “It alerts us when my 11 year-old son has left the school grounds, when it gets switched on and off and cannot receive calls or messages from unauthorised numbers,” Brooke says. “No access to social media and the Internet was a massive plus and the reason why we purchased Spacetalk.”

New features

To retain competitive edge, MGM Wireless recently launched a pink Spacetalk watch, which has contributed to a 16 % sales increase.

“Not only are we driven to introduce the latest cutting edge technology to Spacetalk, but also by producing aesthetically pleasing products,” Mr Fortunatow says. “We want the device to look superb on children wearing them.”

Spacetalk now features a weather report, enabling children and parents to see the current and forecasted weather at any given location.

Reward stars have also been added to the product – an age-old parent and child activity – which incentivises positive behaviour and teaches children about the satisfaction of achieving goals by collecting reward stars for good behaviour or completing tasks.

Other Spacetalk features include a stopwatch, torch and enhanced school mode. The enhanced school mode feature enables parents to specifically select which watch functions to disable during school hours, such as incoming and outgoing calls, messaging, step counter, location and stop watch. Disabling functions during school hours prevents classroom distractions.

Anthony Black is a highly experienced business and finance journalist with over 25 years experience. He was finance editor of the Sunday Herald Sun for eight years and his reports were published in News Limited papers across Australia. He has since written for numerous publications, including BRW for several years and has interviewed numerous ASX-listed company chief executives.