Europe’s largest telecom firm, Deutsche Telekom, is picking up a 17% stake in Indian start-up Devas Multimedia for $75 million, or about Rs 317 crore. Deutsche Telekom is routing its investment in US venture capital-backed Devas through its wholly-owned Asian arm. The deal values the firm at Rs 1,865 crore or about $443 million.
Bangalore-based Devas is a niche satellite-based multimedia services company with plans to deliver content via a hybrid satellite-terrestrial network to mobile devices. It works in the area of software development and research & development (R&D) for multimedia content creation and transmitting content using internet, satellite and terrestrial broadcasting.
Deutsche Telekom would subscribe to upto 28,349 equity shares, amounting to about 17% of Devas’ paid-up share capital. Devas has received a green signal for the fund infusion from Foreign Investment Promotion Board (FIPB), the nodal body for foreign investments into India. The telecom firm would have the option to subscribe to and acquire additional equity shares upto 26% of the total paid-up share capital to ensure compliance with the 74% FDI cap in the telecom sector.
With the investment from Deutsche Telekom, the foreign holding in Devas would go up to 70.41%. Other investors in the firm include venture capital funds Columbia Capital and Telecom Ventures. The VC firms jointly picked up an over 49% stake in Devas in 2006.
Devas is currently working with the Indian Space Research Organisation (ISRO) on providing videos and TV channels on mobile phones, better known as digital multimedia broadcasting (DMB). The services, to be managed by Devas, would be launched in 2009-10 after ISRO launches its new GSAT-6 satellite either later this year or next year. DMB is currently common in South Korea, where both satellite and terrestrial broadcasting are used to beam TV and radio channels on mobile devices.
While Deutsche Telekom is not present in the telecom market in India, it has had an exposure to the country through its IT services arm, T-Systems India. However, the subsidiary was acquired by Cognizant Technology Solutions in March this year. As part of the deal, about 1,150 T-Systems India software developers were transferred to Cognizant, which also became its preferred supplier of offshore resources.
Deutsche Telekom AG, the fourth-largest wireless service provider in the world, is present in over 50 countries. It offers broadband and fixed-network services all over Europe and operates under the T-Mobile brand in 10 markets across Europe and the US. Deutsche Telekom AG clocked revenues of e62.5 billion in 2007.
Source: Economic Times