Monitise Plc (MONIF) shares slumped after the U.K. mobile banking technology company said Visa Europe would prune its stake, marking the latest blow to the embattled Aim-listed company. Resonating the latest announcement, Monitise shares were down 2 pence or 16% at 8 pence at 0741 GMT, valuing the company at 180.6 million pounds.
Visa Europe to prune Monitise Plc (MONIF) stake “over time”
Visa Europe has been a shareholder in Monitise since October 2011. It holds nearly 115.8 million shares in the group, representing 5.3% of the UK technology company. As highlighted by ValueWalk, last year, Visa announced that it was assessing the sale of its 5.5% stake in Monitise.
Once considered a standard-bearer of the U.K. technology scene, Monitise has been buffeted by declining revenues as it changes its business model. The company’s stock has dropped by over 80% over the past 12 months.
On Wednesday, Monitise said it had been informed by Visa Europe of its intention to trim its shareholding “over time.” However, the U.K. mobile banking technology company indicated that they will continue to work together under the terms of a commercial agreement which runs until March 31, 2016. The existing deal was worth 45 million euros over three years.
Monitise Plc moves towards subscription-based model
Monitise provides mobile banking and payment services to financial institutions and said it processes over 5 billion transactions annually, totaling about $101 billion. It has about 33 million registered users. The mobile payments provider also has strategic partnerships with Spanish lender Banco Santander and MasterCard, a Visa rival. MasterCard entered into a strategic agreement with the company in March 2014.
As detailed by ValueWalk, the big problem Monitise is currently experiencing is the transition to a business model based on subscriptions, which has been underway since March 2014. Earlier, analysts predicted that with the build-out of Monitise Central Platform coming to an end, capex should be substantially reduced. Besides, on an ongoing basis, MCP will require lower headcount for development and integration services and feature a more variable-cost approach.
However, Monitise has revised its revenue downward several times in the past year as it has made changes to its business model. Last Monday, Monitise issued its fourth revenue warning since last year. The U.K. company had issued new guidance, saying revenues for the year 2015 were expected to be between 88 million and 90 million pounds, against the 90 million to 100 million pounds anticipated last March.
In February, it was reported that several large U.S. technology companies, including Fiserv, Oracle and IBM, were said to be in early-stage takeover discussions with Monitise.
However, during a Capital Markets Day in February, Monitise CEO Alistair Lukies emphatically said that the mobile-money specialist “absolutely” hasn’t put itself up for sale. He indicated that the results of the company’s strategic review thus far have provided validation of the company’s value.