KUALA LUMPUR: Loss-making mobile virtual network operator XOX Bhd expects to break even operationally in the financial year ending June 30, 2015 (FY15) as its operations stabilises and on an expanded subscriber base.

“In the last (first financial) quarter ended Sept 30, 2014, we lost a couple of hundred thousand (net loss widened to RM336,000 from RM21,000 a year ago), but the management is working hard to turn the company around,” its managing director Ng Kok Heng told reporters after the company’s annual general meeting yesterday.

“We expect to reach a break-even point operationally in FY15,” he said.

“We have reasons to be optimistic because we have seen good growth in (the number of) subscribers and revenue over the last six months. Our costs now are predictable and we have arrived at a business model which will allow us to break even soon,” he said.

Ng said the ACE Market-listed XOX had previously been in operational loss largely due to sizable expenditure for developing the company’s branding in order to acquire customers. In FY14, XOX’s net loss of RM1.6 million was largely attributed to spending on marketing initiatives.

In addition, half of the RM3.93 million proceeds raised from a private placement of 32.2 million new XOX shares in 2013 have been allocated for the company’s “selling and marketing expenses”. This kind of expenditure, Ng said, is paying off as XOX now boasts some 330,000 active customers. XOX aims to double the number of subscribers by end-2015.

While the target is deemed ambitious, Ng believes that there is still plenty of room for subscriber base growth in the “young Malaysian” market the company is targeting.

“We are known to be a very ‘young’ brand and we have very innovative products. We do not just carry the regular services like voice, text and data. We also have our mobile application called XOX-Voopee, which provides worldwide coverage without roaming charges,” Ng said.

After witnessing such tangible success from its marketing campaign, Ng said the company has allocated another RM9 million in operating expenditure to continue its brand-building activities.

Additionally, RM4 million has been allocated for capital expenditure in anticipation of an increase in traffic. The sum will be chiefly used to increase the company’s capacity, reduce redundancy and improve operational issues like customer billing for the New Year, said Ng.

Besides growing its customer base, XOX is aiming to expand its geographical influence beyond the west coast of Peninsular Malaysia to the east coast, and Sabah and Sarawak.

XOX is also planning to expand its product offering to postpaid and phone bundling packages to its customers next year. Shares in XOX closed down 8.33% or 0.5 sen at 5.5 sen yesterday, 93% below its initial public offering price of 80 sen on June 10, 2011. Its market capitalisation stood at RM18.26 million.

This article first appeared in The Edge Financial Daily, on December 5, 2014.