Just last month I had written about HFCL and its business of ripping investors. HFCL has finally made NEA the Bakra. New Enterprise Associates, the desperate PE fund from the valley has bought 40% stake in HFCL Infotel for a whopping Rs 375 crore. This deal values the loss making HFCL Infotel at Rs 950 crore [~ $211 Million]
HFCL Infotel is a CDMA service provider in the state of Punjab and at the end of Jan-2007, it had mere 72,050 Mobile subscribers. HFCL Infotel also has 195,702 Wireline and 57,719 Fixed Wireless subscribers, in all 325,471 subscribers. NEA paid around $650 / subscriber – a ridiculous amount for a company managed by Nahata and Vinay Maloo. Maxis bought a much better company, Aircel, at $ 400 / subscriber a year ago which also had around 2 Million GSM subscribers then. [GSM mobile phone user base is growing faster than CDMA and roughly 3/5th of Indian Wireless subscribers are on GSM network]
Unless NEA analysts who backed this deal kick Nahata and Maloo out of the HFCL board, it is an uphill task to turnaround the company. I can only say that the Indian Telecom bubble has gotten a little bigger with the NEA HFCL deal.
Tags: NEA , PE Fund , Telecom India , Mobile India
With NEA taking 40% equity stake in HFCL Infotel, things will improve for HFCL Infotel in terms of subsriber wbase and overall operations.
regards,
sushant