DHOOTS ENTER TELECOM, SET TO PARTNER VERIZON

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VIDEOCON—one big name that missed out on the telecom boom story—has finally got a foot in the sector. The $3-billion consumer electronics group will partner US telecom giant Verizon’s foray into ILD services in India.

Verizon, which is keen to tap the lucrative market for long-distance calls from India—the call centre of the world—has formed a JV called Verizon Communications India with Leo Communications of the Videocon group. The initial investment in the venture is estimated to be over $30 million. “The joint venture is in the process of applying for a licence to provide ILD services,” people familiar with the development told ET.

Verizon will hold 74% in the venture while the rest will be held by Leo. Foreign ownership in telecom entities is restricted to 74%. Videocon chief Venugopal Dhoot declined to comment. “It is too early to disclose details,” he said.
The annual ILD outgoing minutes from India were 2,500 million in 2005-06 and are expected to rise to 3,500 million by March this year. However, thanks to increasing competition and falling prices, returns from the sector have been falling.

That doesn’t take the lure away from the business. India is one of the most happening places for global telephony and no global major wants to give it a miss. Top global players UKbased British Telecom (BT) and AT&T have already tied up with Indian partners to offer ILD and NLD services while Cable & Wireless too is on the lookout for a partner.

For Videocon, meanwhile, it’s not just about ILD. It sees a synergy in the fast-growing telecom space and connectivity with its existing businesses. “The partnership makes great business sense for us, especially given the convergence in the digital and electronics segment, including IT hardware etc,” a company official said. However, some company watchers believe Videocon will be more of a financial partner in the JV and may sell out in the long run.

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