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Motorola unit on Videocon radar
 
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April 02, 2008 01:08 IST

The Videocon [Get Quote] group has expressed interest in buying telecom giant Motorola's struggling mobile handset business, which is being split into a separate company.

"We have hired one of the world's top three investment bankers who will convey our interest to buy out the mobile handset business of the US company," Group Chairman Venugopal Dhoot told Business Standard.

Explaining why he was bidding for Motorola's handset business, Dhoot said his group was ready to launch its pan-Indian GSM mobile operations at an investment of Rs 6,000 crore.

Also, it has a consumer durables retail chain under the brand name "Next" with over 1,000 stores across the country that stock mobile phones too.

"The Indian market for mobile phones is around 120 million units a year and we have our own retail chain stories that we can leverage. Also, we can transfer the manufacturing plant to India to leverage cheap labour in the country," added Dhoot.

Motorola has a handset manufacturing facility in Chennai that makes both CDMA and GSM mobile phones.

Dhoot said the deal will be financed through a combination of around Rs 1,800 crore of cash reserves and long-term loans raised in the global market.

Motorola's mobile business will be valued at between $3.5 billion and $4 billion. Last year, the company sold over 159 million mobile phones globally.

When contacted, a Motorola India spokesperson said that the company would not be able to comment on speculation.

If Dhoot is able to pull through the deal, he will become the world's third largest mobile player with around 14.3 per cent market share -- just behind Nokia and Samsung.

However, in the fourth quarter of 2007, Motorola registered a 12.3 per cent global share down sharply from 22.4 per cent in Q4 2006.

The failure to replace the popular Razr model has been the main cause of decline.

Motorola's Indian market share is not available, even though industry experts say it is behind Nokia and Samsung.

On March 26, Motorola decided to split the troubled mobile device business into a separate company due to sustained pressure from one of its key investors Carl Icahn, who wants the business to be sold.

The Mobile Devices business will focus on mobile handsets, accessories and software.

Dhoot's record of global acquisitions has been mixed. It recently failed to acquire Daewoo [Get Quote] Electronics, for which it bid $711 million. However, it has successfully bought Thomson SA's television glass tube business and Electrolux's Indian operations.

The Videocon Industries [Get Quote] scrip rose 2.48 per cent on BSE, closing at Rs 314.55 per share against the previous close of Rs 306.95 per share.

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