'Unscrupulous' rivals hit Monstermob profits

Monstermob Group, a provider of content for mobile phones which floated six months ago, has warned that fierce competition from "unscrupulous" rivals would hit profits.

Monstermob Group, a provider of content for mobile phones which floated six months ago, has warned that fierce competition from "unscrupulous" rivals would hit profits.

The company's shares closed down 24 per cent at 114p after it revealed that marketing costs would be higher than expected and it would take an immediate £650,000 charge against investment in new services.

Martin Higginson, managing director, said the company had not expected rivals to take business away through misleading offers, heavily promoted in the press. He said that some companies claimed to be giving away content for as little as 30p, when in fact using those services was likely to prove much more expensive than Monstermob's offering. "We didn't expect them [competitors] to be so unscrupulous in the advertising tack," he said.

Monstermob offers content such as ringtones, games, "wallpaper" and "laddish" material. Mr Higginson said that it was in the area of one-off downloads that competition had been most intense. He said that rivals were offering "unsustainable" prices and poor-quality products.

Monstermob had consequently decided to push consumers more to its subscription content, where customers pay £1 a week to download one of its services. The move increased advertising costs from about £250,000 a month to £500,000. In addition, the company is to take a £650,000 expense through its accounts this year as a "prudent" way of dealing with investment in new services.

Mr Higginson said the company's actions would underpin profits for the next financial year and the year after. "We believe the future of this market is subscription products...We're doing what's right for the business," he said.

Analysts cut pre-tax profit forecasts for the current year from some £3.8m to £2.6m.