After selling off his telecom business to Idea and speculations rife on the sale of his mobile business to Sony Ericsson, B. K. Modi is still betting big on mobile retail. surbhi chawla analyses what makes this business worth keeping for the Modi camp?
It couldn’t have been easy for Bhupendra Kumar Modi, the man who brought mobile phones to our country, to exit the telecom sphere, and that too at a time when the sector is growing exponentially. But even after selling Spice Communications to Idea Cellular, he stands tall and states unabashedly that, “Our Spice brand and the mobile retail chain – Hot Spot would remain with us.” In fact, B. K. Modi is so bullish about the mobile retail venture that big plans are being charted out and an IPO by the end of this year is also on the cards.
With India becoming the second largest telecom market of the world with about 212 million GSM connections (for June 2008 by COAI), and still growing steadily at 18% per annum, there seems to be plenty of scope for the handset market too. The market is pegged at Rs.750-Rs.1000 billion and is growing at a whopping CAGR of 60%. Little wonder that players like The Mobile Store (promoted by Essar & Virgin) Motostore (promoted by Motorola), mbazaar (promoted by Future Group), RPG Cellcom and Subhiksha Mobile have already joined the mobile retail bandwagon.
The handset retail market in India is largely unorganised. According to Mohit Khattar, President Marketing, Subhiksha Trading, “The organised mobile retail market is still small in comparison to overall mobile retail market at a national level. In metros, however, 30-40% of mobile retail is now happening through modern trade.” This untapped potential was first realised by B. K. Modi in 2005 who started Hot Spot with only 15 employees. In less than three years, Hot Spot now boasts of 357 mobile stores in the country with plans to take this number up to 1,000 odd stores by the end of this year. In the National Capital Region alone, Hot Spot has a dense network of 116 stores – by far the largest number of stores by any retail network in a state. What’s more? Hot Spot plans to be a Rs.10 billion company by the end of 2008. But the company seems to have lost the first mover advantage. Given the growing competition from other players & margins in the handsets segment shrinking to less that 3-4%, it could be as tough than the mobile communication business, or tougher.
It couldn’t have been easy for Bhupendra Kumar Modi, the man who brought mobile phones to our country, to exit the telecom sphere, and that too at a time when the sector is growing exponentially. But even after selling Spice Communications to Idea Cellular, he stands tall and states unabashedly that, “Our Spice brand and the mobile retail chain – Hot Spot would remain with us.” In fact, B. K. Modi is so bullish about the mobile retail venture that big plans are being charted out and an IPO by the end of this year is also on the cards.
With India becoming the second largest telecom market of the world with about 212 million GSM connections (for June 2008 by COAI), and still growing steadily at 18% per annum, there seems to be plenty of scope for the handset market too. The market is pegged at Rs.750-Rs.1000 billion and is growing at a whopping CAGR of 60%. Little wonder that players like The Mobile Store (promoted by Essar & Virgin) Motostore (promoted by Motorola), mbazaar (promoted by Future Group), RPG Cellcom and Subhiksha Mobile have already joined the mobile retail bandwagon.
The handset retail market in India is largely unorganised. According to Mohit Khattar, President Marketing, Subhiksha Trading, “The organised mobile retail market is still small in comparison to overall mobile retail market at a national level. In metros, however, 30-40% of mobile retail is now happening through modern trade.” This untapped potential was first realised by B. K. Modi in 2005 who started Hot Spot with only 15 employees. In less than three years, Hot Spot now boasts of 357 mobile stores in the country with plans to take this number up to 1,000 odd stores by the end of this year. In the National Capital Region alone, Hot Spot has a dense network of 116 stores – by far the largest number of stores by any retail network in a state. What’s more? Hot Spot plans to be a Rs.10 billion company by the end of 2008. But the company seems to have lost the first mover advantage. Given the growing competition from other players & margins in the handsets segment shrinking to less that 3-4%, it could be as tough than the mobile communication business, or tougher.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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