Bharat Rakshak

Vipul wrote:Amit while you are right about almost 100% penetration rates in better off economies, its difficult to visualize the same possibility for India.Once you take out kids under 15 yrs of age & folks who are above 65 and Plus you factor in the BPL population, 600 million looks like the top number for India.

Vipul,

Actually when you say there's 100 per cent market penetration (of mobile phones) that doesn't actually mean that every single individual owns a mobile phone.

What it means is that while some people don't own phones, there are others who own more than one phone. The way the market is counted is very simple. For example say you don't carry any mobile phones but me I lead a double life and carry four phones, one for office, one for the wife and two for the different mistresses I have (no harm fantasying is there? ) then the phone penetration rate in a universe consisting of you and me would be 200 per cent.

That how for example, Singapore has a 125 per cent mobile phone penetration rate (sorry in my previous post I had given the wrong figure, I just checked my spreadsheets) and HK also has around that figure. If it was just a one phone for one person it would have been impossible to get to those figures.

And there's no reason to believe that India, as it grows more prosperous, will not have more than 100 per cent mobile penetration rates, and that would be more than 1 billion.

Also the average replacement time for phones is around 2 years. So that's a market which will be huge.

The biggest challenge for Videocon, if it actually manages to buy Moto's mobile phone division is to compete with Nokia in the cheap phone segment in Asia Pacific, excluding Japan (APEJ) region.

Nokia's growth in this segment has been phenomenal. Its interesting to note that in 2006 in APEJ Nokia had a 42 per cent market share while Moto, which came in No2, had an 18 per cent market share.

In 2007 that changed to Nokia with 50 per cent and Moto with 8.7 per cent (or so). Samsung which came in second in 2007 just marginally increased its share from 10.8 per cent to around 12.1 per cent.

This means Moto’s loss has been almost exclusively Nokia’s gain.

If Videocon is to succeed it has to launch a marketing blitz and more importantly steer Moto into launching a slew of cheap handsets, that's where the volumes come from.

In the high end, where the margins come from, Moto's Razr line-up needs an urgent refresh and new devices in the converged phone space (where Nokia rules the roost with its E-series and N-series) are needed.

All these are not insurmountable problems, only thing is Videocon needs to be absolutely sure what's it's getting into.

JMT and all other disclaimers.

Amit, as more people take two connections they would more likely in future upgrade to phones with dual connection capability then buy two hand-sets.
Anyone with info on how successful has Videocon been with its Thomson and Electrolux acquisitions?

I have observed Nokia operations at close quarters and they are really really good. They are like Cisco or GE, i.e. its not just that they are big enough to be a virtual monopoly but they are also very very good at what they do.

Its not impossible to compete with them and the mobile market is a very vast one with plenty of space for others, but you have to be really good to beat them.

Motorola on the other hand have many flaws, even with the basic design of their handsets. A few years back I bought a Motorola handset, and bought a handsfree accessory for it from Motorola. To my chagrin when I opened it up, I found that it doesn't have a button on the headset to connect/disconnect the call when the phone rings, so you have to fish out the phone from your pocket and fiddle with it each time. The workaround proposed to me by the vendor was to set the phone to auto-answer after 3 rings when the headset was connected, but I found that when the headset was connected the ring tone would sound only on the headset and not on the handset. So if it was connected to the headset and kept on a table, I would never hear the ringtone, and it kept picking up the calls after 3 rings that I would never hear. Since then I have never considered Motorola while buying a handset.

Such a thing would never happen with even the cheapest Nokias. Its a pity because Motorola was always considered to be strong on technical parameters such as reception, voice clarity etc.

bart wrote:I have observed Nokia operations at close quarters and they are really really good. They are like Cisco or GE, i.e. its not just that they are big enough to be a virtual monopoly but they are also very very good at what they do.

You’re absolutely right Bart, Nokia is darn good at its business.

And the mobile phone business is getting more complicated by the day. While in developing markets like India and China its still about new handsets and market share, worldwide the mobile phone business is becoming as much about content generation and delivery as it’s about handsets.

In June last year I was in Helsinki and had a chance to meet Olli-Pekka Kallasvuo, the Nokia CEO. He told me that his plan was to change Nokia from a company that only made mobile phones to an Internet company, which happened to also make mobile phone handsets.

The reason for this is simple. The twin factors of saturated markets and converged devices with Wi-Fi, HSPA (high speed packet access) – also called 3.5 G where connection speeds can get to as much as 14 megabytes per second and faster – and built in GPS, its as much as about the value added services as it’s about handsets.

Thus, for example in certain markets if one buys the Nokia Communicator, E90, it comes built in with a GPS antenna and a Nokia Maps application. So if I were to say go to London for a week on a business trip all I have to do is to download (for free) a map of the city of London and buy a one week subscription of GPS connection for London for as little as say $5. And so I have a GPS to guide me around in London without having to buy and expensive GPS device, which could cost almost $1,000. And Nokia and not the mobile phone operator would provide all the services. This instantly opens a new revenue line for Nokia apart from the money it gets from actually selling the devices.

This would be an added incentive for me to buy a Nokia phone. It’s similar in the case of music downloads. Online digital content, both music and video is the fastest growing means of selling content. And music is available in high quality 128kps and higher, which makes it almost loss less.

Nokia late last year launched its online content portal Ovi, which has thousands of songs geared for the Asia Pac region. All these moves are geared to take on Apples iPhone and iTunes combination, which are changing the rules of the game. And just like GPS and maps, you download the content from the Internet, either via your computer or directly from you r phone. If you use your computer you are again not paying anything to your mobile phone operator. In case of a direct download, you just pay the data charges. The price of the music goes to Nokia in the case of Ovi and Apple in case of iTunes.

Coming back to Motorola, it came to the party late, at least in the Asia Pacific region. It recently bought a regional content provider, Sound Buzz, which has good Chinese content (songs and video) but is nowhere in the same league as iTunes and Ovi.

If Videocon hopes to become a mobile phone player with global aspirations, it will have to factor all these challenges in, apart from building a better and wider range of mobile handsets.

Meanwhile Moto as part of its downsizing of its mobile division has already announced a $500 million restructuring plan which will entail downsizing and closing down a number of phone factories.

However, I personally think if Videocon can get Moto’s handphone division for a reasonable price it would be a great acquisition, despite challenges. Much in the same way Jaguar and Land Rover is a great acquisition for Tata Motors.

JMT and standard disclaimers.

sucks! again duplicate post. sorry guys something wrong with my darn notebook!

Vipul wrote:Amit, as more people take two connections they would more likely in future upgrade to phones with dual connection capability then buy two hand-sets.

There are very few handsets with dual SIM card capability and almost none in the high end segment. I don't think handset makers will shoot themselves in the foot by mass marketing such devices, though off course the technical challenges are minimal.

And the idea of more than one mobile phone is not just about convenience, it's also about prestige. "I can, therfore I do" kind of thing.

RIL embarks on global oil-terminal hunt.

Jindal Drilling buys 49 pc in Singapore firm.

Tatas pick up 60 pc stake in Spanish firm.

Bharti looking at acquisitions in emerging mkts.

Videocon, Indiabulls, JSW Steel ink pacts to acquire Coal Mines.

In what could be one of the largest energy hunts in the overseas market, three Indian companies, Videocon, Indiabulls and JSW Steel, have either acquired or are in the process of acquiring coal mines in Africa.
This would give them access to coal mines with over 1 billion tonne in reserves. The three firms have struck separate deals with Rachana Global, a Mozambique-based mining firm, to acquire the coal assets in a deal worth over $2 billion jointly.

Amit are you in the telco/VAS space

Reliance Group is planning to get majority stake in Marks & Spencer India.

Reliance Retail may form JV with UK`s firm
Email Print

The wholly owned subsidiary of Reliance (Q, N,C,F)* Industries, Reliance Retail, is likely to form a joint venture with UK retailer Marks & Spencer (M&S), reports Business Standard.

It is expected that the partnership deal may be signed by next month.

M&S may hold a majority stake in the venture. India allows 51% foreign direct investment (FDI) in single-brand retail and 100% in cash-and-carry operations. Multi-brand retail is barred for foreign companies and investors.

M&S is one of the UK`s leading retailers of food, clothing as well as home products. It employs over 75,000 people and has over 600 stores in the UK and over 275 stores in 39 territories around the world.



Shares of Reliance gained Rs 36.8, or 1.55%, to end at Rs 2,418.05. The total volume of shares traded was 677,037 at the BSE. (Wednesday)

JK Tyres acquires Mexican firm Tornel for Rs 270 crores.

Tata makes offer to acquire Brazilian ore miner AVG.

SIRO buys out German clinical R&D firm.

GMR to acquire 50% in SA coal firm for Rs 620 cr.

Reliance Communications buys UK-based WiMAX operator.

Reliance Communications Ltd, India's No 2 mobile operator, said on Thursday it had acquired eWaves, a UK-based operator of fourth-generation (4G) services, and would launch 4G services globally.

Bharti Airtel eyes South African firm.

Bharti Airtel is learnt to be considering a bid for South African telecom firm MTN, which has operations in over 20 countries. If successful, it will catapult the company into the league of top global telecom players.

MTN has 68.2 million subscribers and its largest operations are in South Africa, Nigeria and Iran. Its market capitalisation is $33 billion, slightly below Bharti Airtel?s Rs 175,613 crore (almost $44 billion).

Bharti, the country?s largest private provider of telecom services, has around 62 million mobile subscribers and another two million fixed-line subscribers.

Berger acquires Polish Co for $38 mn.

3i Infotech buys US-based Regulus Group for $80 Million.

Essar Steel seals deal for US steel firm for $1.1 bn.

Strides to buy 55% in Australian firm Genepharm.

Dr Reddy's buys BASF's pharma contract biz in US.