The conflict between Russia Ukraine aggravates the financial crisis
Yo Mobile, owned by US-based Yonder Media Mobile Inc., has most of its team in Ukraine and Belarus.
On January 3 of this year, Yo Mobile lost a binding deal with Veon Ltd, a telecommunications services company and one of its most important partners, leaving a $3.7 million hole in the company’s finances.
“(Vladimir) Putin’s folly also caused our largest client (Veon Ltd) to break a binding contract with us, blowing a huge hole in our first quarter revenue,” wrote Kidron, who is also a record and television producer. , a Expansion on June 28 after a publication about his company.
The company’s problems were aggravated by the outbreak of the war between Russia and Ukraine, which began on February 24 this year.
“We struggled to fill the financial gap, but most of our team is in Ukraine or Belarus and the perception was that the investment in Yo Mobile had become more risky,” reads an email from the company’s CEO. to one of his collaborators to explain the reason for the non-payments last June and to whom Expansion had access.
new investors
The company, which arrived in the country in the midst of the pandemic with the promise of democratizing telecommunications services, had a loyalty system, called YOYO, through which it gave away points for spending time consuming content on the platform, which they could be exchanged for more content, but also for telephony services.
“Users are happy with us, but they have realized that we practically give away plans and this has a (negative financial) effect,” the source says.
The company, which until last June had invested 11,613,127 dollars in Mexico and had more than 140,000 active subscribers, took on the task of looking for new investors to help it continue operating. But the complex context for the economy due to inflation and the war itself prevented Yo Mobile from finding capital injections.
“Adam (the owner of the company) had to go there to see the team and it took him three days to get to kyiv because of everything that is happening between the two nations. We tried to raise more capital and it was not possible. The markets are very difficult right now,” said the source who requested anonymity.
According to an email sent in June by the CEO of OMV to one of his collaborators, the company would have found a new Mexican investor whose name was not revealed. The news motivated one of Yo Mobile’s investors in the United States, who would be willing to match the capital injection.
But “the Mexican investor did not provide the financing” and “we were forced to quickly stop all new content creation,” the CEO continues in the email sent to the contributor.
This situation forced the company to inform all its employees that it would have to close its operations in the country and to inform them that the payment of the debts would be carried out in monthly installments. Yo Mobile also stopped publishing the podcasts that were part of the content it offered on its platform.
The OMV then told Expansion that it was still “exploring options”, it maintained its operations intermittently and at the end of July it informed its consumers that new terms and conditions would come into effect. For example, the “suspension of services to users who did not use the application for more than seven consecutive calendar days.” Those users who did not accept the new condition were terminated from Yo Mobile.
The company’s last attempt to save the operation in Mexico was to reach an agreement with another telecommunications company to migrate its traffic due to the non-payments it had with Altán Redes, however, the attempt that took ten weeks collapsed a few days ago. Yo Mobile was unable to finalize the deal with the company, whose name it did not reveal, but said it is located on the Red Compartida infrastructure.
The future of Yo Mobile
The source of the company close to the process assured that the OMV reached an agreement with Altán not to abruptly disconnect its users and give them time to carry out their portability. In addition, it will continue to negotiate compensation for collaborators, of which 45 have already been paid; three are in the process of receiving their payments; and five are still in the process of negotiation.
Although Yo Mobile will end offering telecommunications services, it seeks to resume the platform where it housed its digital currencies called YOYO$. “This technology was our bet and telecommunications services were used as a strategy to give users a plus, but what they want to build is something more technological,” explained the source who requested anonymity.
Yo Mobile, which still has engineers in Eastern Europe, maintains a “small” team to try to rescue the ship.