Hutchison stake to boost Videocon's convergence plans

agencyfaqs! News Bureau

MUMBAI, September 14

Stock market circles in Mumbai are abuzz with the news that the Hong Kong-based Hutchison Whampoa group is looking at a 15-20 per cent stake in Videocon International, the Rs 3003-crore flagship of the Videocon group. The move will help Videocon transform itself from a strict hardware manufacturer to a broadband services provider.

While the price at which the deal will be struck is not yet known, analysts based in Mumbai point out that if Hutchison picks up the 15 per cent stake, the stake of the Dhoot family - the promoters of Videocon - will come down to 38.4 per cent from the current 45 per cent.

The partnership comes at a time when Videocon has firmed up major Internet initiatives spanning a range of products, applications, content and access. "The idea is to become

a full convergence company," says an analyst working with a Mumbai-based securities firm. The company also hopes to get into the area of Voice over Internet Protocol (VoIP), which is where the Hutchison group's interests lie. The equity participation from Hutchison may be used to part-finance the project.

The company also hopes to target home users with a new proprietary technology, television application protocol (TAP). TAP, which represents an advancement over web TV, will help viewers to surf the Worldwide Web while watching television. To be launched by September-end, TAP will be developed in conjunction with US-based Telecruz Technologies. Videocon has invested $10 million to develop TAP at its development centre in San Jose, California.

The first phase of the current project will require an estimated investment of Rs 3 to 4 billion. Videocon has completed trial-runs for its Web-enabled televisions. It is now building the infrastructure for its dial-up Internet service, which will be offered in 85 cities across the country.

The company has also set up its own horizontal portal, hellovil.com, which will be the default home page for its ISP business. Videocon is planning alliances with cable operators across the country for Internet access and hopes to reach two million users by the year 2002. With all this in place, the company hopes to clock a turnover of Rs 80 billion by 2003 and Rs 200 billion by 2007.

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