Weekend Update
The big story for the past week was Vodafone rejecting Essars demands. goBroadband reader, pointed out that IndiaPlaza price challenge was a gimmick and he was denied the gift voucher which he deserved. He also sent out screen shots making his case – One and Two.
Indians are getting more Internet and Mobile savvy when it comes to banking. Telecom India has an exclusive update on the state of WiMax in India. Dr. Paulraj thinks that WiMax is a great opportunity for Indians in the wireless space. TRAI is doing a good job but still at snail’s pace. Tired of tele-marketers, I compiled a list of tele-marketers on Do Not Disturb India. Registering on their respective websites will help you stop reciving unwanted calls.
NEA the New Bakra of HFCL and Nahata
Just last month I had written about HFCL and its business of ripping investors. HFCL has finally made NEA the Bakra. New Enterprise Associates, the desperate PE fund from the valley has bought 40% stake in HFCL Infotel for a whopping Rs 375 crore. This deal values the loss making HFCL Infotel at Rs 950 crore [~ $211 Million]
HFCL Infotel is a CDMA service provider in the state of Punjab and at the end of Jan-2007, it had mere 72,050 Mobile subscribers. HFCL Infotel also has 195,702 Wireline and 57,719 Fixed Wireless subscribers, in all 325,471 subscribers. NEA paid around $650 / subscriber – a ridiculous amount for a company managed by Nahata and Vinay Maloo. Maxis bought a much better company, Aircel, at $ 400 / subscriber a year ago which also had around 2 Million GSM subscribers then. [GSM mobile phone user base is growing faster than CDMA and roughly 3/5th of Indian Wireless subscribers are on GSM network]
Unless NEA analysts who backed this deal kick Nahata and Maloo out of the HFCL board, it is an uphill task to turnaround the company. I can only say that the Indian Telecom bubble has gotten a little bigger with the NEA HFCL deal.
Tags: NEA , PE Fund , Telecom India , Mobile India
RCom back to PLan – A for GSM rollout
ADAG managed Reliance Communications is back on Plan – A to rollout GSM services across India through its subsidiary, Reliance Telecom reports DNA. Immediately after Vodafone India was born, I had said, Reliance Telecom will get aggressive on its GSM plans.
Telcom India writes that the Government has delicensed WiMax spectrum in the 5.8GHz frequency.
Tags: Mobile India , GSM , Reliance, Wimax
IDEA Cellular IPO subscribed 50 times
Idea cellular which had been constantly dumping stake to Private Equity and VCs, late last night completed its IPO in India. From the subscription figures obtained from Ventura Securities, their is a terrific demand for Indian Equities. The Idea IPO was of $500 Million and received bids for $25 Billion. Last April, Birla’s bought 48% Idea Cellular stake from Tata’s at $ 1 Billion.
All the brokerage houses were bullish on the prospects of IDEA cellular except, First Global’s Shankar Sharma, who felt it was expensive. A Broker with Ventura said,
After the Vodafone – Hutch deal, valuations of other Indian telcos are also likely to rise. However, Idea is likely to trade at a discount to Bharti Airtel.
The immediate challenge for Indian telcos is the falling ARPU / Month without any alternative source of revenue such as 3G services or Broadband. ARPU / Month which were at Rs 450 levels are likely to be between Rs350 – Rs400 for Bharti Airtel and Vodafone India; While for Reliance Communications it is likely to be in the range of Rs300 to Rs325 in the coming quarters.
Tags: Mobile India, IPO India, Idea Cellular, Telecom
Web 2.0 India – Speakers and Events
Web 2.0 India – Innovations and Challenges will be held on Feb 22nd and 23rd at Bangalore. Here is the program schedule for the two day event.
Ashish Gupta, MD of Helion Ventures is the keynote speaker. Arun Ramanujapuram, Directot at Yahoo! R&D will speak on Social Web followed by Anand Sudhakar and Mahesh Tiyyagura of Yahoo! on Search Engine Marketing. It would have been really nice if they had included Dr. V Vinay from Pinstorm who has done a fantastic research on Search Engine Marketing in India.
Saikirishna from IBM software labs will speak on Enabling “Kansei Engineering” using Web 2.0 followed by T Hashmi of Yahoo! R&D on Ratings and Review Platforms. I am glad they have included Security and Testing. Kedar Kulkarni of IBM will speak on Security Consideration while Testing Wwb 2.0 Applications.
Day 2 begins with tools for Web 2.0. Sanjay Jain, Product Manager @ Google will speak on Mashup and Maps. R Krishnaiyer from Adobe on FLEX and Philip Tellis on Yahoo! UI Library. I am wondering where is the Redmond Giant which produced some great tools during the desktop revolution.
Gautam Pai, IBM will speak on Enterprise application for Web 2.0 and RajKiran Guru will speak on Innovations in IBM products using Web 2.0. Sanjay Kesavan from IBM and Venkat Krishnan from Yahoo! will speak on Representational State Transfer – REST.
Here is the Web 2.0 event registration form.
Tags: Web 2.0 , Yahoo India, IBM India, Google India
Vodafone India – Arun Sarin’s Masterstroke
After Hutch-Essar acquistion by Voadfone, everybody is busy to digest the impact it will have on Vodafone Group Plc. I don’t know the health of Vodafone Group Plc but all I can say is it will make money from Vodafone India [Yes I would like to call it Vodafone India and no more Hutch Essar]
Arun Sarin carefully scripted the entire takeover battle taking into confidence Vodafone board, HTIL, Essar Group, Ministry of Finance, Minsitry of IT and Communications and the CEO of Hutch Essar, Asim Ghosh.
- Vodafone Group Plc board wanted growth and they’ve got it.
- HTIL’s Li wanted a fair price to exit and he is a happy man. But questions about Asim and Max’s stake in HTIL’s 67% is unanswered.
- Ruia had met Sarin in London and guess Sarin then handed the script of Ruia’s role in the takeover drama
. - Indian Government is happy to have a global telecom giant in India and is more happy to make Reliance Telecom invest aggressively to expand the GSM footprint creating more jobs and small business opportunities for Indians.
- Also had Reliance won the bid, then their would be legal hurdles as in some circles, Reliance would have more than 50% marketshare. Essar and Ambani rivalry would spark again.
- Had Vodafone not won the bid, then I am skeptical if Vodafone had any plans to operate in India.
- Asim Ghosh already enjoys the confidence of Arun Sarin though both went to different schools [Asim graduated from IIT Delhi, while Sarin went to IIT Kharagpur]
On Valuation – Enterprise Valuations at $19 Billion does look expensive, and Vodafone is paying 7 years of forward revenues of Hutch [$126 ARPU / Year]. But Vodafone India will continue to grow and thus 12 months from now, the deal would look fairly valued.
FDI Hurdle -I think Vodafone India may go for an IPO to fulfill FDI regulations and don’t be surprised if Mr. Sarin obtains special permission from the Indian Government for smooth transition. Essar is planning to delist Essar Steel and Essar Oil from Indian stock exchanges and hence may sell part of their stake at current valuations.
Vodafone’s Holding in Bharti Airtel Ltd- Mr. Mittal was not comfortable SingTel raising stake in the company and hence asked Sarin for a deal. Bharti Airtel will buyback 5.6% of Vodafone’s stake at $1.6 Billion with deferred payment plan. Vodafone will continue to hold 4.4% stake in Bharti Airtel without board representation. Vodafone’s investment in Bharti Airtel has already more than doubled in 18 months.
Overall, Mr. Arun Sarin has done a fantastic job. Like a Godfather, he has given everybody a deal which they can’t refuse
Tags: Mobile India, Vodafone, Arun Sarin, Telecom
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