VIDEOCONâ€”one big name that missed out on the telecom boom storyâ€”has
finally got a foot in the sector. The $3-billion consumer electronics
group will partner US telecom giant Verizonâ€™s foray into ILD services
Verizon, which is keen to tap the lucrative market for long-distance calls from Indiaâ€”the call centre of the worldâ€”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. â€œThe joint venture is in the process of applying for a licence to provide ILD services,â€ 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. â€œIt is too early to disclose details,â€ 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 doesnâ€™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, itâ€™s not just about ILD. It sees a synergy in the fast-growing telecom space and connectivity with its existing businesses. â€œThe partnership makes great business sense for us, especially given the convergence in the digital and electronics segment, including IT hardware etc,â€ 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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