Bloomberg News

Gemalto Sees Sales Boost From U.S. Wireless Speed Upgrades

February 15, 2013

Gemalto NV, the French smartcard maker that sells more than a billion SIM cards for mobile devices annually, predicts a boost in sales and profit from phone carriers this year as more U.S. consumers switch to faster wireless services.

Gemalto, scheduled to release fourth-quarter results March 14, at least met its forecast of 300 million euros ($399 million) in profit from operations in 2012, Chief Executive Officer Olivier Piou said in an interview. The increase of 25.5 percent or more -- Gemalto’s biggest in four years -- was helped by adoption of fourth-generation technology, he said.

“Every time a 4G phone is activated, Gemalto gets paid,” Piou said. “We already charge a premium for 4G SIM cards. The next step is growing our revenue from services like mobile payment and advertising.”

As consumers move to devices such as Apple Inc (AAPL:US).’s iPhone 5 and Samsung Electronics Co.’s 4G-enabled Galaxy smartphones, carriers are upgrading SIM cards and paying to activate them. New services such as mobile payment and advertising on smartphones will also drive sales for the Amsterdam-based company this year in the U.S. and Asia, Piou said.

Gemalto climbed 0.6 percent to 69.90 euros at 4:22 p.m. in Paris, erasing earlier losses. The stock joined France’s leading CAC 40 index in December, and has risen almost 60 percent during the past 12 months.

4G Innovations

European carriers are falling behind their U.S. rivals in efforts to boost tariffs with faster service, so 4G is slower to catch on there, Piou said. U.K. mobile-phone company EE, which is owned by Deutsche Telekom AG and France Telecom SA, uses its SIM cards, Gemalto said last month.

“We’ve deployed some back-office maintenance and security systems in Europe, which carriers pre-install regardless of the number of 4G users,” Piou said. “For innovation in 4G services, you’ll have to look to the U.S. and Asia.”

Gemalto, which helps clients make everything from bank transactions to government passports more secure, said in August it would reach the 300 million-euro operating profit target -- set in 2010 as part of a three-year strategic plan -- a year early, and would increase revenue and profit in all its main segments. Gemalto defines the metric as operating income adjusted for items such as restructuring and acquisition-related expenses.

The company has said it will unveil a new multi-year strategic plan in the second half of this year.

Piou, a 54-year-old engineer, has headed the company since it was created in a 2006 merger of Gemplus and Axalto. He returned the group to profit by shifting revenue from older commoditized smart chips to new security technology.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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