BlackBerry Inks Strategic Cross-Platform Deal With Emtek

BlackBerry Limited (NASDAQ:BBRY) recently entered into a strategic alliance with PT Elang Mahkota Teknologi Tbk. (“Emtek”) of Indonesia to provide market-leading services to its BBM cross-platform customers. Emtek is Indonesia’s largest entertainment business with media, entertainment and technology services. This deal is part of BlackBerry’s renewed strategy of targeting future growth through software, licensing and IP enhancements.

Following the announcement of the deal, shares of BlackBerry stock gained 3.02% to close the trading session on Jun 28 at $6.48.

BlackBerry aims to provide a holistic entertainment and social media service to its customers with this deal. Indonesia is one of the key markets for the company as the nation has 60 million BBM users – two third of BlackBerry’s customer base of 90 million.

Aspects of the Deal

The deal comprises of a licensing agreement which allows Emtek to create BBM applications and services for all three main smartphone platforms – Alphabet Inc.’s (NASDAQ:GOOGL) Android, Apple Inc. (NASDAQ:AAPL) iOS and Microsoft (NASDAQ:MSFT) Corporation’s Windows. Per the agreement, BlackBerry will make its BBM application program interface (API) available to Emtek.

KMK Online, Emtek’s digital content unit, will open an office in Toronto to work in close proximity with BlackBerry. KMK Online boasts a variety of assets in entertainment, such as broadcast television and content production, which would give BBM users access to innumerable services. These would include national free-to-air (FTA) television stations, over 100,000 hours of TV and premium content, a major online video platform and three production houses. In addition, Emtek’s would provide BBM users online and offline commerce services like shopping, gifts, coupons, movie bookings, health services, job postings, travel booking, payment processing, money transfer services to name a few.

Growth Opportunities

BlackBerry expects the new partnership to result in an increase in the number of BBM users. The company targets higher revenues from licensing, software and services segments to gain higher margins and deliver positive earnings as it continues to struggle with its underperforming hardware segment. Emtek too views this deal as a viable growth opportunity and intends to provide competitive research and development to provide best services to help expand BBM’s market share.

Overall, the deal is expected to benefit both companies as well as the customers by opening up access to a wide range of entertainment and commerce services.

Zack Rank and a Stock to Consider

BlackBerry currently sports a Zacks Rank #3 (Hold). A better-ranked stocks in the telecom sector which could be considered is NTT DoCoMo Inc. (NYSE:DCM) which holds a Zacks Rank #1 (Strong Buy).