CMG contract win sends message to Logica

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CMG, the Anglo-Dutch IT services company, yesterday upstaged its rival Logica again by winning another contract to supply next-generation text messaging technology.

The deal, the fourth the company has announced so far, will see CMG supply its multimedia messaging service to Portugal Telecom's mobile phone business, Telecomunicacoes Moveis Nacionais.

"It [the deal with Portugal Telecom] is another significant step in consolidating our position as the pre-eminent supplier of multimedia messaging solutions to the mobile market," Alvaro Plaza Ugalde, managing director of CMG's Spanish wireless data division, said.

MMS is an extension of the current text messaging systems on mobile phones and will enable customers to send and receive messages that include text, pictures and video clips.

The deal with TMN, Portugal's leading mobile phone operator, will see that company start to roll out next-generation services to its user base over the coming year.

Shares in Logica, however, dropped 4 per cent, or 19.75p, to 434p, making it the third biggest faller in the FTSE 100 index, after investors fretted it had still not signed any major deals in that space. Shares in CMG, however, were little changed, closing down 3.75p at 255.75p.

CMG has already won contracts to supply an MMS service to Telia, Telenor and Hutchison and is trialling the technology with a further 15 operators including Telefonica of Spain.

Logica, meanwhile, has signed two MMS contracts so far with unnamed operators and is still trialling its kit with a further 20 operators around the world.

Michael Finney, an analyst at SG Cowen, said: "We think CMG has got quite a credible offering in the MMS space and we've yet to be convinced that that's the case with Logica.

"They [Logica] haven't given us any detail or made any big signings. That's not to say they don't have anything but we need to see some deals," Mr Finney said.

CMG and Logica, which both benefited from the explosion in text messaging services, came under the cosh earlier this year after failing to secure possibly one of the most lucrative MMS contracts, with Vodafone.

That mobile phone operator, which selected Ericsson as its MMS supplier, is, however, renegotiating the contract and speculation is rising that CMG could get a second chance.

Mr Finney said: "We suspect they [CMG] were very close with the Vodafone deal. It appears they've got a bit of momentum in their offering."

Analysts at Dresdner Kleinwort Wasserstein agreed, saying: "We believe that the momentum in terms of MMS is likely to continue to be with CMG in the short term."