Kogan Mobile Is Making More Money Than Anyone Expected

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Kogan relaunched its mobile business in late 2015 after shutting it down in 2013. This time around, the company used Vodafone as its wholesale telco provider. After just over a year, Kogan Mobile has grown so much that it exceeded its six-month revenue forecast by 83.3%, according the company's financial results for June to December 2016.

Kogan is officially classified as a mobile virtual network operator (MVNO) currently making use of Vodafone's 4G network. The company was previously aligned with Telstra through ispONE. After ispONE went into administration, the wholesale contract with Telstra was cancelled and Kogan Mobile customers were left in the lurch. In the end, Kogan Mobile shut up shop only to be resurrected in October 2015.

Kogan Mobile is known as a budget mobile service brand and competes with the likes of Vaya, Aldi Mobile and Amaysim. It's a tough market to play in.

Business has been good for Kogan Mobile. According to Kogan's first half-year financial results (for the June to December 2016 period), the mobile business outperformed the gross sales forecast by a whopping 83.3%.

Kogan had expected the mobile business would make around $1.4 million by the end of the 2017 financial year; it has already hit $1.1 million in the first six months. While it credited its strong commercial relationship as a big reason for the success, Kogan noted that there are other factors that have contributed to the results:

Due to the commission-based business model, Kogan Mobile incurs minimal operating costs. Marketing is the primary cost and it is variable and targeted.

Since Vodafone is responsible for operations, Kogan only has to worry about branding, marketing and customer acquisition: "Kogan Mobile Gross Sales are 100% gross margin."

Obviously you can't gauge the success of a mobile business with financial results alone; how's the customer service? According to Product Review, the service is alright.

Overall, Kogan's financial results for the first half of its 2017 financial year is quite healthy:

  • $143.9 million revenue (37.3% growth)
  • $3.7 million net profit after tax, exceeding full year forecast
  • Active customer base hit 830,000 (up 18.2%)

Last year, Kogan bought and relaunched Dick Smith Electronics' Online business.


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