Guvera pulls out of Australia

The Gold Coast-based streaming service is exiting its native territory following weeks of financial trouble and brand ruination.

The move was announced in a note to shareholders yesterday afternoon when Guvera cited its plans to focus on emerging countries.

In late June the Australian Stock Exchange (ASX)stompedGuvera’s proposed IPO, blocking Guvera’s hopes of raising between $50 million and $100 million. A month later Guvera put two of its subsidiaries – Guvera Australia and Guvera Services – into voluntary administration. Then just 12 days ago its CEO Darren Herft resignedand was replaced by founder Claes Loberg in the interim.

Interestingly, Loberg had actually hinted at Guvera’s exit from Australia in his exclusive interview with TMN this month. Speaking about Guvera’s legacy since exiting several major territories – including North America, Mexico, Russia, Vietnam and the Philippines – Loberg said:

“Even with the wild press here, we’re still proud to be Australian; we’re still proud to have come so far here. We’ll be back, but for now, we need to focus on other markets.”

The note sent to shareholders yesterday was published by Mumbrella this morning. It partly reads:

“After several changes in the product and a strategic re-evaluation of the business, we have decided that in order to achieve sustainable and long-term goals we will focus all efforts in key emerging countries, such as India and Indonesia. Research shows that in these countries, consumers simply can’t and won’t pay for the streaming of music and we feel we can return the greatest value to shareholders.”

The focus in its key emerging markets will be on product development, brand channels and sales; but as Loberg told TMN this month, Guvera will return to its axed markets.

“We are withdrawing from several territories – some I wish we could stay in – but we will focus on our bigger markets, get to a critical success point and then push out once again together with our brand partners,” he told TMN.

Since the ASXblocked potential investors from backing Australian music streaming service Guvera in early June, the service hasfaced heavy criticism from Australia’s technology industry heavyweights. Allan Goldin from the Australian Shareholders Association (ASA) told 2GB last month he took issue with Guvera’s financial status.Crucially, the platform is valued at $1.3 billion but it lost $81.1 million in the last financial year on revenue of $1.2 million.

“We can’t understand how a company that looks like this, is at the stage that they’re very close to be offered to shareholders to go and put their money into it,” Goldin said.