From jokes to ring tones, Buongiorno still evolves
By Elisabetta Povoledo

ROME: What started 12 years ago with jokes has become serious business in the world of providing ring tones, games, information and marketing services for mobile communications.

Last week, Buongiorno, the Italian leader in this growing sector, announced that it would pay €141 million, or $192 million, to buy its British counterpart, iTouch Ventures. Buongiorno said the merger would broaden the company's reach to 40 countries and reach 100 million cellphone customers, making it the world leader in providing such mobile services.

"We're trying to grow as fast as the market is growing," said Andrea Casalini, the chief executive, succinctly synthesizing the company's business plan. "It's bringing good entertainment to people and monetizing that process."

A report issued in June by the Mobile Business Observatory at Polytechnic University in Milan noted that global market growth in mobile services increased just 15 percent last year after several years of nearly 50 percent growth. But analysts believe that the future is bright.

"When one sector is saturated, there will be new demands to satisfy," said Margherita Pagani of the I-Lab Research Center on Digital Economy at Bocconi University. "It's a virtual world, so it's always open to new forms of offerings, proliferating like Web sites on the Internet."

Buongiorno has come a long way since 1995, when its current chairman, Mauro Del Rio, began sending e-mail messages containing jokes to 11 friends under the subject line "Buongiorno" ("good morning" in Italian).

In just three years, he was circulating e-mail newsletters to some 25,000 people, a sizeable platform on which to build an online advertising business.

The company's focus began to shift to mobile phone services in 2000, and it expanded both internally and through a series of international acquisitions.

Even so, Buongiorno wasn't exactly a start-up venture in a garage. Before founding Buongiorno, Del Rio had been a consultant in wireless telecommunications technology at Accenture, and Casalini had worked as a consultant at the consulting firm McKinsey.

"We grew very fast over the last few years. It's been mostly organic, though we've taken on board countries where the acquisitions boosted our reach geographically or in different segments," Casalini said.

Past purchases of companies in Italy, Spain, France, the Netherlands and the United States allowed Buongiorno to branch out in new directions, like voting and interactive TV services, chat and social networking, and mobile video production.

With the iTouch acquisition, the company now has a 5 percent share of the global market in "added" mobile services, he said. Buongiorno's services are divided between direct transactions - sales of ring tones, music, games and accessories to individual customers - and digital marketing services to telecommunications and other groups. Last year, it posted €192 million in consolidated revenue, about evenly split among three markets: Europe, North America and Spanish-speaking countries.

Analysts agree that Buongiorno benefited from being headquartered in Italy.

"The domestic market in Italy turned out to be very fertile and very complicated," said Andrew Bud, president of the Mobile Entertainment Forum, an industry trade association.

Widespread and competitive mobile phone use in Italy provided "vigorous and good feedback." And Bud said any company that managed to successfully navigate through Italy's complex policies "is well fitted to work in other markets. They'll never be traumatized by complex measures."

Italian companies as a whole are faring well in the mobile content sector, analysts say. "It's one of the few technological sectors that emerged here and that have a relevant role abroad," said Filippo Renga of the Mobile Business Observatory.