How Reliance Communications Paid for the Yipes Deal ?
Reliance Communications acquired Yipes Enterprise Services on Monday in an all cash $300 Million deal. Yesterday, it dumped 5% stake in its subsidiary, Reliance Telecom Infrastructure Ltd [RTIL] company to strategic investors [VCs,PE Funds and FIIs] at a whopping $337.5 Million thus valuing RTIL at whopping $6.75 Billion. This is a very intelligent move by Anil Ambani and his financial wizzard, Amitabh Jhunjhunwala. Why ?
- Reliance which is on an agressive network expansion needs cash and the sale of stake in RTIL will pay for the Yipes deal.
- Citigroup in its research report released on Tuesday had valued the RTIL business at mere Rs 60 / share of RCOM. However, with the Thursday’s deal, Ambani unlocked the fair value of RTIL at Rs 135 / share of RCOM
- Reliance Communications proposes to dump more stake in RTIL to raise cash for RCOM and then list RTIL as well as Flag Telecom separately on the bourses.
- Unlocking the value of all these companies means, Anil Ambani climbing faster on the ladder of World’s Richest.
With these developments, Telecom Research Analysts maybe forced to revise RCOM’s 12 Month forward stock price target to more than Rs 600. RCOM has moved up by 3.5% since the announcement of the deal. Telecom stocks may not enjoy higher forward P/Es in the next few quarters[3-4] but considering the tremendous growth potential in Indian market, they look good atleast in the short term.
Tags: Reliance, Telecom, Mobile, Venture Capital
Online Classifieds Market in India pegged at $25 Million
The online classifieds market in India is roughly pegged at Rs 100 crore [$25 Million] and growing upwards of 50% YoY according to Sulekha CEO, Satya Prabhakar. Majority of the business comes from Metros and Tier-1 cities in India. Also, the volume of transactions happening online is just 20% with the potential to reach 100%. Sulekha is particularly popular amongst NRIs while Craigslist, IndiaList, Kijiji and Rediff continue to thrive online in India.
Kijiji [a subsidiary of eBay] receives 400,000 unique visitors every month and is monetized by Google Adsense. eBay has its own AdContext program under construction for several quarters now, but I wonder if it will ever go live 
Kijiji is toying with the idea of localization in Hindi and Tamil on a pilot basis. However, Harish Bahl of Smile Interactive thinks that most transactions can happen in English while sites which are content oriented need to be localized. Time frame when localization will be demand more than ever is – 2 years.
Tags: Online Classifieds, Internet India, Web India, Online Advertising
Reliance Communications Acquires Yipes Enterprise Services
Reliance Communications [RCOM] has acquired privately held leading provider of managed Ethernet and application delivery services for the global enterprise – Yipes Enterprise Services. RCOM is shelling out $300 Million for the acquisition in an all cash deal. Yipes was funded by JP Morgan Chase, Norwest Venture Partners, Sprout and Crosslink Capital.
Anil D. Ambani, Chiarman Reliance Communications said,
This is the largest acquisition that Reliance Communications has ever made. The acquisition of Yipes drives forward our strategy to offer the most sophisticated, cutting edge data communication products and services, specialising in application and content distribution, spanning developed and emerging markets. We see enormous potential to rapidly expand Yipes coverage in the US and to globalise Yipes service by leveraging our customer relationships and network reach around the globe. We confidently expect this acquisition to significantly enhance the growth rate, profitability and returns of our global data business.
Yipes will be acquired through RCOM’s subsidiary - Flag Telecom. Flag Telecom owns the largest IP Network in the world and its business will complement that of Yipes making it the best strategic Buy for Rcom. Yipes owns 22,000 route kilometres of fibre across 14 US metros, which covers around 40% of the total US datacom market. With the acquisition of Yipes, RCOM will accelerate its penetration into the lucrative $ 100 billion global enterprise data market and will be better able to serve its international customers directly in the US. Key senior management at Yipes have committed to remain with the company. Reliance has plans to list Flag Telecom on the London Stock Exchange.
Tags: Reliance, Telecom, Yipes, Enterprise Networking, Optical Networks
Do we really need Airtel’s GPS Navigation ?
Bharti Airtel Ltd in association with Wayfinder Systems has launched GPS navigation for select few cities in India[Bangalore, Chennai, Chandigrah Delhi NCR, Kolkatta, Mumbai and Pune] and for almost the entire US and Europe. Few months ago I had seen a GPS navigation system in Bangalore and didn’t find it good and compelling enough to recommend to others. The bad thing about this is, it is only compatible with BlackBerry 8800 sets. How many of us are really Blackberry users ?
Mr Sanjay Gupta, Chief Marketing Officer, Airtel Mobile said,
Airtel users will also have the option to purchase map information and area coverage details of Europe and North America.
Why should one purchase GPS in the US when you can install Google Maps which is as good as a GPS system. In the snaps below you can see Google Map View as well as Satellite view of Redmond Ridge in the state of WA. Mobile screens captured on my Nokia N70 running Google Maps powered by Airtel Online GPRS network.
BSNL’s Loss is Bharti’s Gain
BSNL’s Mega GSM Tender for PAN India expansion is very likely to face further delays due to questions raised by IT and Communications Minister, A.Raja.
Capacity shortfall has led to BSNL’s share of net adds declining sharply to ~13% in the last 12 months from a peak of 21% in FY05, and has been worsening. Bharti Airtel has benefited most from an “inactive” BSNL – its share of adds improving by 6% in past three years. Vodafone-Hutch-Essar is already the second largest GSM Operator in India.
India is in midst of strong growth with sub additions projected to peak in FY08 at 7.1m and 7.5m in FY09. Any loss of market share on account of delay of tender in these two years would be difficult to bridge once the growth tapers off beyond FY09. Hopefully they will resolve this issue soon.
Tags: Mobile India, GSM Tender, BSNL, Vodafone India
Who are the losers in Hutch-Vodafone Deal ?
Vodafone CEO, Arun Sarin said – Losers Club tried to derail the Hutch-Vodafone Deal earlier this year.
I really did not expect people — the ‘good and great’ of India — to be calling cabinet secretaries, ministers, to say, ‘You have to unwind this deal, because we want a piece of it.The billionaire losers’ club was trying to unwind the deal. What was fascinating was that there was absolutely no transparency to the process. What I didn’t count on was that the bureaucracy would kick in with this kind of evil spirit from our competitors who had lost. I was completely confident from a political standpoint we would have the blessing and air cover.
Who was the major contender for the Hutch block of shares with support from Buraucreats ? Bharti Televentures never competed. It can’t be Aircel, because Aircel’s then CEO, Jagdish Kini is an honorable man in Telecom circles. He made Karnataka the largest Telcom circle in India for Bharti Airtel in terms of subscribers. So all fingers now point to Anil Ambani. Quite possible going by his father’s track record.
Tags: Mobile India, Telecom India, Vodafone, Reliance
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