Videocon Plans to Acquire Motorola's Mobile Handset Business

This time After Tatas, the Acquisition turn to Videocon Industries, Now Motorola's Mobile Handset Business is in its radar. The world’s third-largest handset maker had announced on March 26 its intention to hive off the mobile devices business into a separate company in the wake of sustained pressure from Its Key investor Carl Icahn, who wants the company to sell the business.

For Videocon, an attempt to shore up its planned Mobile services business in India through its telecom arm Datacom, one of the world’s fastest-growing mobile markets. Datacom has already received licences to offer mobile services throughout India ( All 23 Circles ) and is awaiting allotment of spectrum to launch commercial operations.

Videocon has already announced an initial investment of Rs 6,000 crore for its telecom operations and eyeing 25 million customers in the next three years. Videocom expect handset business will be an added advantage as the company can bundle attractive offers with mobiles.

As per the estimates, Motorola’s handset business at $3.8 billion. Motorola’s market share in India at 14% in December 2006 which has now slipped to 6.5%. Its worldwide market share has also dropped from 22% to 12%. Last Year it sold over 159 million mobile phones globally.

The failure to replace the popular Razr model has been the main cause of decline. Motorola’s Indian market share is not available, even though industry experts say it is behind Nokia and Samsung.

Motorola also has a handset manufacturing facility in India ( Chennai ) that makes both CDMA and GSM Mobile Phones.

“We have hired one of the world’s top three investment bankers who will convey our interest to buy out the mobile handset business of the US company,” Group Chairman Venugopal Dhoot told to Media. “The Indian market for mobile phones is around 120 million units a year and we have our own retail chain stories that we can leverage. Also, we can transfer the manufacturing plant to India to leverage cheap labour in the country,” added Dhoot.

India is adding over 8 million subscribers every month. With a tele-density of 25% in a country of 113 crore people, there remains immense room for growth. The acquisition, if it comes through, will give a boost to Videocon’s plans to become a pan-India player.

More:

» Videocon's Global acquisitions are Thomson SA’s television glass tube business and Electrolux’s Indian operations. It recently failed to acquire Daewoo Electronics, for which it bid $711 million.

» In domestic through its retail chain, NEXT has acquired Planet M, the music and entertainment retail arm of media house Bennett, Coleman & Co. (owner of The Times of India, The Economic Times), for Rs 200 crore. Planet M has 150 stores across 42 cities in India and is mainly into organised music retail and home entertainment business.

Related Posts by Categories