IP E-Game Ventures, Inc. has divested from the operator of Netopia internet cafés due to the lower demand for its business, as consumers shift to mobile devices and places offering free Wi-Fi.
In a disclosure to the stock exchange on Wednesday, IP E-Games said it is assigning P62.93 million worth of shares in Netopia operator Digital Paradise, Inc. (DPI) to Y-Fi Business Solutions, Inc. This is equivalent to 62.93 million shares in DPI with a par value of P1 per share, or 48.38% of DPI’s total outstanding shares.
IP E-Games said DPI’s Netopia business has been in a “state of steady decline” over the years, with its financial statement showing losses since 2016 alongside the closure of more internet cafés.
DPI booked a comprehensive loss of P4.31 million by end 2016 when it had 40 operating stores. Its losses further ballooned to P43.22 million in 2017.
As of end-November, DPI’s losses reached P31.43 million, while its operating stores dwindled to 14.
IP E-Games noted negative trends, such as the increase in locations that offer free Wi-Fi, the widespread popularity of portable gaming devices, as well as the improving economy which has allowed more people to purchase mobile devices, indicate that the slowdown in the internet café business will be hard to reverse.
“All this has caused a significant reduction in the demand for internet cafés, and a downward trend in DPI’s sales, transactions per store and number of stores — all of which justify the Issuer’s exit from this industry,” IP E-Games explained.
The listed firm added that there would have been a strong possibility that no other willing buyer will step up to acquire its stake in DPI if it passed up the opportunity to divest, citing the downward trend in the company’s earnings.
IP E-Games acquired a stake in DPI back in 2016. The decision to divest from DPI is in line with the company’s decision to evaluate the potential sale of non-core assets.
“Upon rationalization of the operations of DPI and pursuant to the authority and directive by the Board, the Executive Committee, through the Chief Finance Officer, decided to divest portions of its investment in DPI,” the company said.
Incorporated in 2005, IP E-Games is primarily involved in the business of interactive gaming and content distribution to the local, regional, and global market. It also offers online games such as massively multiplayer online role-playing games (MMORPGs) and casual online games.
The company widened its attributable loss to P2.72 million in the first nine months of 2016, compared to P1.86 million in the same period a year ago. Revenues meanwhile stood at P148.82 million. — Arra B. Francia