The initial wave of companies that tried to make it big in the first real surge of mobile phone mania lost a great big pile of investors’ money. Around 2001, for instance – when the exasperating Crazy Frog was little more than troublesome tadpole – telecoms firms were beginning to realise that the worth of voice calls was waning and were therefore touting WAP as the next big thing. But WAP (essentially a means for supplying a range of basic information services) failed to take off as expected, mostly because consumers baulked at having to pay more for applications that were both slow and unreliable.

Casualties in these dark days were legion. Despite relationships with football clubs Derby County and Leeds United (to produce club specific content for fans), Wap Integrators infamously generated just £30 of revenue during the year to June 2001 and eventually went into liquidation. The likes of MobileFuture, OverNet Data and RTS Networks also saw their business plans run aground (and their cash resources dry up).

Fortunately, the current crop of mobile phone service providers, who have benefited from the more widespread acceptance of WAP replacements GPRS and 3G, appear to have business models that are much more sustainable.

WIN leads the way

Take WIN, for example. This company tackles the mobile market in two ways. Firstly it provides and manages a series of mobile device-based services, from text-message-based football score updates through to the text-voting systems. WIN’s other main focus is the provision of connectivity to the UK’s various mobile networks. Vodafone, O2, Orange et al operate slightly different networks from each other, which can make connection difficult, and WIN offers its businesses customers a solution to this problem.

Perhaps more importantly, demand for its wares is strong. August’s interims showed pre-tax profits charging up 118 per cent to £1.4 million as sales advanced 56 per cent to £20.6 million, figures that afford chief executive Peter Button the confidence to declare WIN the second largest player in its chosen market.

Impending regulation will make it easier for people to opt out of the text-service schemes the company benefits from and this could have a negative impact. Nonetheless, full year profits are expected to hit £2.4 million and cash reserves have risen to almost £5 million. Trading on a prospective p/e of 14.3, the shares look good value.

Monster profits

Like WIN, MonsterMob also looks perfectly poised in the mobile market. Billing itself as ‘the UK’s best-selling mobile content brand’, the Lancaster-based company develops and delivers a plethora of mobile services, from ringtones and screensavers all the way through to video clips.

Growth has been exponential. Last year the company generated £21.1 million of revenue and turned an impressive £2.6 million profit before tax too. Both figures were surpassed in the first six months of the current year alone (half year profits leapt almost 350 per cent to £3.5 million) and expectations are for an even stronger second half, with full year profits predicted to top £10 million. With the company increasingly eager to develop its overseas presence, this figure may almost double again in 2006.

The downside of this rapid growth is that MonsterMob’s share price has galloped ahead and the company, which arrived on AIM with a market cap of £32 million in late 2003, now boasts a valuation in excess of £200 million.

So while Monstermob is an impressive, rapidly expanding, business, investors need to decide whether or not the shares deserve the current 25.9 p/e ratio they trade off.

Best of the rest

AIM-listed 2ergo’s technology enables users to communicate with staff or customers remotely through a variety of means, including text, video and voice. Clients include McDonalds and BP.

During the interim period to February, profits raced up 155 per cent to £540,000. Even more encouraging was a September trading update that hinted full year figures – to be announced in November – should exceed already upgraded market forecasts for a £1.5 million pre-tax profit. Like MonsterMob, the shares currently trade at a premium but should not be overlooked.

Although currently loss-making, AIM newcomer Vimio is worth keeping an eye on. Vimio’s wares allow users of 2.5G mobile phones to obtain live TV images of 3G quality, through their handsets. There are also applications in gaming, music and mobile surveillance.

Last year the company lost £1 million on turnover of £116,000 and in the three months to March this year losses were £213,000 on turnover of £147,000. Profits, however, are expected in the not-too-distant future, and the shares have speculative appeal for the brave.