Videocon to bid for Motorala’s Mobile business

So screamed the headlines in almost all Business dailies.

The Videocon group is interested in buying Motorola’s handset business.

Motorola’s handset wing is struggling for survival, as was evident from their poor showing at all world events such as CES 2008 and MWC 2008.

“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.
According to Dhoot, Videocon is ready to launch its pan Indian GSM mobile operations at an investment of Rs 6000 crores.

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

Motorola’s handset manufacturing facility in Chennai makes both CDMA and GSM handsets. It’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. 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 is behind Nokia and Samsung.

If Videocon pulls through the deal, it will become the world’s third largest mobile player with around 14.3 per cent market share – just behind Nokia and Samsung.