Pokemon craze ensures it's all systems go for revived Filtronic

Pokemon Go, the free-to-play location based reality mobile game, isn't just boosting Nintendo's coffers.

The game, which has taken the world by storm as mesmerised players scout their local environment in search of the virtual monsters, is also expected to provide a big boost for mobile phone technology firm Filtronic.

Rob Smith, CEO of the Leeds-based firm, said: “Pokemon Go is the latest phenomenon to drive telecoms infrastructure. Until now it’s been driven by people watching Netflix and BBC iPlayer, but with Pokemon Go, it’s completely different.

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“The game encourages people to go out and use the 4G service and they consume data in a different way as the game is permanently on.

“You have to be connected all the time or you lose all your Pokemons. It’s increasing demand for telecom services.”

Smith believes it is only time before other titles will be launched, boosting demand for Filtronic’s technology.

“It’s inevitable that some other old titles will come out – all the games from 20 years ago as well as new titles,” he said.

Smith has overseen a remarkable recovery at Filtronic since he took over the helm a year ago.

The group reported a significant improvement in second half trading following a raft of new orders.

Filtronic has announced a number of orders for integrated ultra-wide band antennas over the last six months.

​“​Production of these antennas ramped through the period. ​Interest from other potential customers is also increasing. We have received orders from eight clients in applications that range from telecoms backhaul to aerospace.“​

Following the trading update, analyst George O’Connor at Panmure Gordon said: “The uncertainty of the last year, the management changes, the fundraise, move to AIM and the restructuring have all impacted the share price.

“The mainstay of investors are likely to await full results publication before forming an investment view, but more risk-friendly types are likely to take a view that; (i) remedial measures are starting to show progress, (ii) the ‘macro’ clouds are starting to dissipate, (iii) we have the first inkling of M&A in the segment and, (iv) the share price has been dramatically over- sold.”

So could the fall-out from Brexit damage Filtronic’s recovery? “It’s difficult to assess until we know what happens,” said Smith.

“The immediate impact is the exchange rate fluctuation. Most of the pricing is in dollars so we are largely shielded on a transactional basis. At the moment it’s helping.”

Is he worried about a skills drain as EU nationals worry about their future in Britain?

“The skills drain is an issue,” he said.

“We have a couple of key engineers who are EU nationals. If we can’t hire those sort of people it could be an issue.”

Smith admits the group has had a bumpy ride over the past few years.

He was CFO from June 2014 and took over as CEO in March 2015 after Alan Needle fell on his sword following the group’s fourth profits warning.

“When I came on board I was sold a fantastic story that didn’t quite happen. The company nosedived,” he said. “It’s too easy to blame previous management. This is a very volatile industry and it’s very easy to believe you’re backing the winning horse and the product doesn’t go to market. The previous management didn’t make the right calls.

“We had a very painful period of laying people off and restructuring. But now we are recruiting and yesterday I signed off two new positions in Leeds.”

Smith now believes the group is on the right path.

“The global telecoms market place is really booming as the world moves to 4G. There’s even talk of 5G, which will bring gigabyte speeds to your mobile. Your phone will be permanently connected to the internet at very high speed.

“Our key customers have teams ready for it.”

These customers are the likes of Nokia and Ericsson.

While the market is doing the right thing for Filtronic, the group is focusing resources on what the market wants.

“The big seller is integrated ultra-wide band antennas. Every time a new spectrum is released, the network operators have to spend a lot of money, but with an integrated ultra-wide band antenna, one antenna will do the job,” he said.

“At a minimum every site has three antennas and there are 50,000 mobile phone masts. In the US there are 250,000 and in China there are a million.

“In the US they are much taller and are festooned with kit. It’s a wonder they don’t fall over. Operators are keen to reduce the amount of kit.”

He said that moving forward, each operator will only need one antenna.

“Our unit encompasses all of the kit in one box. It will mean power saving and an improvement in the signal quality.

“We have solved a lot of the challenges in quite a unique way. Our offering is cost competitive and it’s technically better than our rivals’,” he said.

So what is the biggest challenge facing the group now?

“We’ve had great success with one particular customer and one particular product – the antenna,” he said. “

That’s been successful to the extent we are very concentrated on that customer. We need more customers and a wider spread of products.

“Until we have landed our second or third customer, we can’t relax.”

Smith won’t name the key customer, but analysts say it is Nokia.

Smith is doing all the right things and he knows that it’s time to start talks with other firms that will want to make the most of the Pokemon Go phenomenon.