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Satyam Info cracks portal deal, sets trend - Views on News from Equitymaster
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  • Nov 30, 1999

    Satyam Info cracks portal deal, sets trend

    According to newspaper reports, Satyam Info has bought its first Internet portal, IndiaWorld for US$ 103 m. This was reported by a leading financial daily.

    Satyam Infoway (59% subsidiary of Satyam Computers) was the first private sector company to break into the ISP (internet service provider) business. It is the second largest Indian ISP, after Videsh Sanchar Nigam Ltd. (VSNL). As on 30th September 1999, the company offered internet services in 27 Indian cities, with a total subscriber base of 87,000 Internet subscribers. Satyam Info had earlier come out with an initial public offering (IPO) on NASDAQ of US$ 85 m.

    Satyam Info has already paid Rs 1.2 bn (US$ 28 m) for a 24.5% equity stake. It has acquired the option to purchase the remaining shares (75.5% stake) next year for Rs 3.3 bn (US$ 75 m). As an indication of its commitment, it has already paid a non-refundable deposit of Rs 513 m (US$ 12 m) for the 75.5% stake. Should it decide not to purchase the company, Satyam Info will forego the amount.

    IndiaWorld (erstwhile Ravi Database) has some pretty popular websites to its credit - samachar.com, khoj.com, khel.com and bawarchi.com. The sites get a large number of overseas visitors, particularly non-resident Indians (NRIs). Satyam Info will be banking on that, for its future applications on the Internet like e-commerce transactions.

    This is a watershed deal on the lines of Microsoft's takeover of HotMail.com and Amazon's takeover of Junglee.com. All these deals were struck at exorbitant rates, considering the fact that the target sites were posting miniscule turnovers. While this was the trend in the US markets, Satyam Info's takeover of IndiaWorld has signaled the arrival of hot Internet deals to Indian shores.



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