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July 1, 1997


Distacom aspires to become India's McCaw

Hong Kong venture capital company Distacom Communications Limited is betting on becoming one of the largest players in the Indian cellular services sector, according to the Chairman Richard Siemens.

"We want to become in India what McCaw was in the US," he said, referring to McCaw Communications, now AT&T Wireless Communications. "Our licences in India give us the revenue potential to be the biggest," Siemens said in an interview.

Distacom has stakes in cellular operators in Bombay, Calcutta, Punjab and Karnataka. "There will be a consolidation in networks, and we have the drivers to allow us to accumulate," Siemens said.

Distacom holds 20 per cent in Hutchison Max Telecommunications Limited, a joint venture for cellular services in Bombay between Hong Kong's Hutchison Teleocm, a unit of Hutchinson Whampoa Limited and Max India Limited.

It holds 25 per cent of Calcutta cellular operator Modi Telstra Private Limited, a joint venture between Telstra Corporation of Australia and Usha Martin Industries Limited. And it holds 39 per cent in Modicom Networks Private Limited, a joint venture between Modicorp Private Limited and Motorola Inc which has licences for Punjab and Karnataka.

Siemens said Distacom's total investment in India was in the region of $225 millions. "Our investment is about $160 millions in Modicom, $40 millions in Hutchison Max and $25 millions in Modi Telstra." The company also has $100 millions invested in Tokyo Digital Phone Company in Japan and $50 millions in Mandarin Communications Limited in Hong Kong.

In India, Siemens expects its state licences to start making profits in 18 months without accounting for the licence fees. The Bombay zone should start making money in 1997, and Calcutta will reach 20,000 subscribers this month and grow quickly in 1998.

Siemens said Distacom was 30 per cent owned by the Singapore Government, 20 per cent by investment house Lazard Freres, 10 per cent by Peregrine Securities and the rest by individuals including Italy's Gianni Agnelli through Exor.

He said the value of Distacom's properties would be about $1 billion. "In five years, our six licences should be worth $5 billions," he added.

On whether India would be the biggest expansion for Distacom, Siemens said since the company invested large funds in the nation, it would remain the most important. "But we are looking at several things, including a bid for Italy's third cellular licence. We are also looking at Taiwan, China and Thailand. There are a lot of people who have won licences and don't know how to run it. Our strength is that we work with indigenous partners and the foreign partner, and smooth things out," he said.

- Compiled from the Indian media

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