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Videocon in talks to buy US giant Motorola's business

Videocon is keen on Motorola’s assets for cashing on the rising demand for cell phones in India, reports Venkatesh Ganesh.
Hindustan Times | By Venkatesh Ganesh, Mumbai
UPDATED ON APR 01, 2008 09:01 PM IST

Indian consumer electronics and home appliance major Videocon, with a turnover of $4 billion (16,000 crore), is eyeing the mobile handset arm of the 80-year-old US technology giant Motorola.

Motorola said on Friday that it was splitting its mobile handset business into a separate company. “We are interested in acquiring Motorola’s handset business and are planning to submit a bid,” said Venugopal Dhoot, chairman, Videocon group. Videocon, which has been banking on a strategy of buying overseas assets, will shortly appoint a global investment bank to assist in the transaction.

The group is in initial stages of evaluating a bid. “Our team will visit Motorola’s facility soon,” said Dhoot. According to Merrill Lynch and other analysts’ estimates, Motorola’s handset business is worth about $3.8 billion.

Videocon is keen on Motorola’s assets for two reasons. First, the company wants to cash in on the rising demand for cell phones in India. According to research estimates, 55 million handsets are consumed in a year in India and size of Indian cell phone market is pegged at $2.5 billion (Rs 10,000 crore). In India, Motorola’s handset sales continue to be under pressure as Nokia, which has in excess of 60 per cent market share, and others handset makers like Samsung, LG, Sony Ericsson, Huawei and ZTE are increasing their shares.

Last year, Videocon was awarded a licence to offer cell phone services across the country. Videocon is also in the process of aggressively expanding its electronics retail chain, Next, which sells televisions, laptops and mobile phones. “We have a presence in consumer durables retail and with mobile-phone licences, we would like to have a ready manufacturing set-up that can cater to India and other markets,” Dhoot added.

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