News reports here Wednesday (April 2) quoted Venugopal Dhoot, chairman of Videocon Industries Ltd., as saying that "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 U.S. company."

Videocon expects to finalize the deal through a combination of long-term loans, to be raised in the global market, together with its cash reserves of about $450 million.

The company, which has vowed to invest up to $1.5 billion to roll out GSM-based wireless services across India, also operates a chain of more than 1,000 retail stores nationwide under the Next brand, through which it sells consumer durables, including handsets. Having a handset business of its own could enhance the company's position in the wireless space.

"The Indian market for mobile phones is around 120 million units a year, and we have our own retail chain of stores that we can leverage. Also, we can transfer the manufacturing plant to India to leverage cheap labor [costs] in the country. We are very, very interested," reports quoted Dhoot as saying.

Motorola recently set up a handset-manufacturing plant near Chennai, in southern India, where it makes both GSM and CDMA handsets. Its spokesperson in India declined to comment on the possibility of a deal with Videocon, citing company policy, the reports said.

India will be crucial not only as a market, but also as an R&D center for the new handset company that Motorola is in the process of forming. About 40 percent of all the software that goes into the company's handsets is developed at its Indian R&D centers.

Videocon, which is striving to establish a presence in electronics markets globally, earlier acquired the color television tube-manufacturing facilities of the French company Thomson SA. It failed in its bid to acquire Daewoo Electronics of South Korea.

Motorola has two joint venture companies with Indian partners, both formed in 2006: CanvasM, with Tech Mahindra Ltd., and WMNetServ, with Wipro Ltd.

By: DocMemory
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