The BPL Group has tied-up with Konkan Railways to provide Internet services covering Maharashtra, Karnataka and Goa. Konkan will lease its railway infrastructure to the new venture on a revenue-sharing basis.
The group's flagship company BPL Limited is one of India's foremost consumer durables companies. It is India's largest producer of Colour Televisions (CTV's) with a market share of 25% in FY99. It also produces B/W TV sets, alkaline batteries and gas tables. It integrated its operations backward into colour picture tube manufacture. The Group has diversified into telecom and internet services, identifying both as key growth areas in the future.
The tie-up has advantages for both the companies. The move gives BPL ready access to Konkan's railway line infrastructure, which translates into a wide reach in all the three states viz. Maharashtra, Karnataka and Goa. For Konkan on the other hand, it means an extra source of revenue by utilising its existing infrastructure. It also means lesser dependence on the government to fund its operations.
The joint venture is being registered as an Internet Service Provider (ISP). With this the new entity will tap subscribers in small cities. It is also planning to carry voice traffic (telecom) using the same infrastructure, as and when the regulations permit it. This could give BPL's telecom business a fillip.
Though the joint venture has the advantage of existing infrastructure, it may find it difficult in getting subscribers in smaller towns. With over 130 registered ISP's, there will be no dearth of competition for the new entity. Although the internet has been identified as a medium that will revolutionise business transactions, it is still early to say whether this will translate into profits.
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