Spice Group Targets Mobile Internet Market For Growth

Group Targets Mobile Internet Market For Growth

S-Mobility has come out with a Tablet Spice MiTab priced at Rs.12990
S-Mobility has come out with a Tablet Spice MiTab priced at Rs.12990 | Source

Group Targets Mobile Internet Market For Growth

Listing in London

In last May, B.K. Modi’s Spice group was planning for a $1 billion issue and a London listing to be accomplished within a year. Spice Global is the holding company of the Spice group and B.K. Modi is based in Singapore. The Spice group has two businesses namely the Singapore-based Spice i2i and the Mumbai-based Spice Mobility. Spice group has valued the two companies for $2 billion. The name i2i stands for Ivory Coast to Indonesia. Spice group will be using the proceeds of the issue for expanding its operations into Africa and West Asia.

London Still Offers Charm

At a time when the importance of London as a financial centre of the world is declining, the Spice group will have London as its administrative and financial hub. But there is logic in choosing London for its activities. London is proximate and has strong connections with West Asia and Africa. Spice group is planning acquisitions in these places in mobile devices, retail and distribution firms. B.K. Modi feels that London is a place where Europe and America converge. He also feels that London is an ideal place for those doing business in African and West Asian countries. B.K. Modi’s reasoning is not entirely wrong inspite of reduced importance of London.

Targeting Mobile Internet Market

Spice is in the process of consolidating its business. In Mumbai, it has already made steps by merging Spice Televentures and Spice Mobiles. It is in the process of consolidating Spice i2i nation by nation. Spice group acquired the Indonesian company Affinity, a mobile handset producer and distributor early last year for $175 million. Now the Spice group is also targeting the growing mobile Internet market. Expansion in this area will be done under the Spice brand itself as against marketing mobile handsets under the local brand names. Till now the penetration of Internet in the i2i markets is low.

Spice Wants To Become Apple of Asian Continent

Spice group was planning last year to list Spice Global, the holding company, in the stock exchanges in London, Hong Kong or a US bourse. B.K. Modi is the head of Assocham, a group of industrialists in India. Spice group is a $1.4 billion entity. The group sells 1.5 – 2 million mobile phones every month. Its retail and value added services arm is Spice Mobility. This company has also planned to be listed in the bourses. Spice Mobility is negotiating with chipset producers in South-East Asia (ASEAN countries) who manufacture low cost products with high processing capacities. Spice group wants to emulate Apple and wants to become Apple of the Asian continent. Instead of Apple’s expensive models like iPad and iPhones, the Spice group visualises offering different technological products at low cost to woo the customers. At a later stage, the Spice group has plans to come out with smartphones and tablets with varied applications.

Spice Group Targets Mobile Internet Market For Growth

Spice Group Targets Mobile Internet Market For Growth

Spice Group is in the business of  selling mobile handsets
Spice Group is in the business of selling mobile handsets | Source

Spice Group Targets Mobile Internet Market For Growth

Cash Rich in 2009 by Selling Telecom Business to Idea Cellular

Spice Mobility is functioning in five states in India. It is planning for countrywide expansion in India. It is trying to build its Spice brand in India at present. Spice group is searching partners all over the world in major markets. Mostly it is looking for partnership with local players. In 2009, the Spice group was cash rich with Rs.2700 crore obtained from the sale of its Indian telecom operations in the name of Spice Communications to Idea Cellular, which belonged to Aditya Birla group. Now Idea Cellular is one of the players whose telecom licences have been cancelled because of the Supreme Court judgement. In 1982, B.K. Modi brought Modi Xerox into India. In 2009, Modi purchased Mediaring, a company listed in Singapore Stock Exchange out of the surplus cash he had for 60 million Singapore dollars. This company was renamed as Si2i. The acquisition of Mediaring also opened the door for Modi to places like Kuala Lumpur, Tokyo, Beijing and Shanghai where Mediaring already had its subsidiaries.

Spreading Wings through Acquisitions

After acquiring Si21, Modi acquired 65% stake in Malaysia’s CL group at an investment cost of $25 million. He followed it up with acquisition of NewTel Corporation of Thailand at an investment cost of $22 million. NewTel Corporation possessed a brand WellcoM and also a local popular brand Blueberry. For this investment, Modi got bases for operation in Cambodia, Myanmar and Laos. Modi wants to increase the sales of mobile handsets from the present 1.5 million per month to over 10 million per month in another three years. For this, Modi needs to focus on emerging markets like India and China for growth. European and US markets have become saturated in mobile handsets and moreover their economies are also not doing well.

Listed Company in Singapore Stock Exchange Is Not Doing Well

Modi is negotiating with some handset makers in Vietnam and Philippines. Modi is also negotiating to buy a local company in South Africa which sells its mobile handsets across African continent producing a sales figure of 1.3 million handsets per month. But at the same time, inspite of all the ambitions, Modi will be the first man to admit that his listed company in the Singapore Stock Exchange is not performing well. Investors have not been rewarded by this company.

King of Joint Ventures

Bhupendra Kumar Modi’s business acumen can never be under doubt. Before liberalisation, it was mandatory for foreign companies to partner with Indian firms. At that time, Modi brought famous foreign firms like Xerox, Olivetti and Telstra among others and started joint ventures with them. After the liberalisation process, Modi exited from some of the ventures while retaining profitable ones. Modi made big money by selling his Spice Telecom business to the Aditya Birla group company Idea Cellular. Had Modi not sold his telecom business to Idea Cellular, now Modi would be stuck up with the Supreme Court judgement, cancelling telecom licences.

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Spice Group Targets Mobile Internet Market For Growth

Can B K  Modi steer the Spice Group to success?
Can B K Modi steer the Spice Group to success? | Source

Spice Group Targets Mobile Internet Market For Growth

Mobile Internet Penetration Is Low in India

Modi is upbeat about the prospects of Mobile Internet and Mobile entertainment in India and other countries. Right now, only 3% of the Indians access Internet through their mobile phones. In China, the figure is 45% and in Indonesia, it is 30%. For mobile Internet to make a big wave in India, the smartphone cost and the broadband cost have to come down appreciably. S-Mobility plans to bring trendy handsets to capture the attention of young people in India which will offer unlimited entertainment.

Tie-Ups with Various Companies

B.K. Modi has recently acquired Indonesian company Nexian, which manufactures mobile handsets. Modi has also tied up with the Taiwanese chip maker MediaTek for a joint venture partnership. In India, S-Mobility has tied up with Tata Communication, Reliance Communication and other mobile service providers. S-Mobility will be launching a series of Internet-ready mobile handsets with screen size ranging from 2.4 inches to 10 inches. S-Mobility’s manufacturing plant is located at Baddi in Himachal Pradesh.

$2 Billion Investment Planned In the Next Decade

Over the last two years, the Spice group has invested more than Rs.2000 crore in telecom business. In the next decade, the Spice group will be investing over $2 billion. Over the next decade, the Spice group plans to generate revenue of over $20 billion. Out of this, India is set to contribute $4 billion. Spice Digital, a value-added services company, has started a next generation mobile portal called Spice Gang. The users can subscribe through this portal various entertainment services. Spice Digital has added two services in Cambodia namely Mobile Radio and Voice Chat. For both the services, the company has partnered Hang Meas, which is Cambodia’s fastest growing media production firm. The partnership is for content development in association with Metfone-Viettel, which is a top telecom operator in Cambodia.

Net Tablet

S-Mobility has come out with a Tablet Spice MiTab priced at Rs.12990. It has 7 inch operative touch screen with resolution 800 × 480 pixels, 800 MHz processor, 4 GB storage space and a microSD slot. It has Wi-Fi, 2 MP rear/VGA Front camera, Bluetooth, 3G, Android 2.2 operating system, voice calling and other standard facilities. It weighs 480 g. While the tablet has some good features like clear audible sound and good display, it has a poor camera. The phone has no USB host and no HDMI out. It is one among the heavier tablets in the market. Heavier the tablet, better are the features. The performance of the tablet is also good because of the 800 MHz processor. The bundled leather case prevents any damage to the Tablet.

Bollywood Glamour

Spice Mobility was planning in last June to pick up 20% stake in a Rs.200 crore digital incubation fund started by Assocham. The incubation fund is to provide seed funds for start-up IT firms with focus on R&D in mobile telephony sector. As B.K. Modi is the President of Assocham, he has associated his company Spice Mobility with the incubation fund in a big way. In October last year, Spice Mobility released two handsets which are described as advanced music phones. They are called Samba and Carnival. They are priced at Rs.3599. Bollywood actress Sonam Kapoor launched the mobile sets in Mumbai.

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