Hks Distacom Bets Big On The Cellular Front

Hong Kong venture capital company Distacom Communications is betting on becoming one of the largest players in the Indian cellular services sector, chairman Richard Siemens told Reuters.

We want to become in India what McCaw was in the U S, 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 a recent interview.

Distacom has stakes in cellular operators in the cities of Bombay, Calcutta, Punjab and Karnataka.

There will be a consolidation in networks, and we have the drivers to allow us to accumulate, Siemens said.

The Indian government has auctioned cellular licences under an economic liberalisation programme that began in 1991.

Distacom holds 20 per cent in Hutchison Max Telecommunications, which is a joint venture for cellular services in Mumbai between Hong Kongs Hutchison Telecom, a unit of Hutchison Whampoa and Max India. It holds 25 per cent of Calcutta cellular operator Modi Telstra, a joint venture between Australias Telstra Corp and Indias Usha Martin Industries. And it holds 39 per cent in Modicom Networks, a joint venture between Indias Modicorp and Motorola Inc, which has licences for Punjab and Karnataka.

Siemens said that Distacoms total investment in India is in the region of $225 million. Our investment is about $160 million in Modicom, $40 million in Hutchison Max and $25 million in Modi Telstra. The company also has $100 million invested in Tokyo Digital Phone Company in Japan and $50 million in Mandarin Communications in Hong Kong. In India, Siemens expects its state licences to start making profits in 18 months, without accounting for the licence fees.

The Mumbai zone should start making money in 1997, and Calcutta will reach 20,000 subscribers this month and grow quickly in 1998.

Siemens said that Distacom is 30 per cent owned by the government of Singapore, 20 per cent by investment house Lazard Freres, 10 per cent by Peregrine Securities and the rest by individuals including Italys Gianni Agnelli through Exor.

He said that the value of Distacoms properties would be about $1 billion. In five years, our six licences should be worth $5 billion, he added. On whether India would be the biggest expansion for Distacom, Siemens said that since the company invested large funds in India, it would remain the most important.

But we are looking at several things, including a bid for Italys third cellular licence. We are also looking at Taiwan, China and Thailand. There are a lot of people who have won licences and dont know how to run it. Our strength is that we work with indigenous partners and the foreign partner, and smooth things out, he said.