Satyam to Invest in Gateways, Acquisitions
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Post-IPO Satyam Infoway Ltd. has declared gateways will be the prime focus for the millions it accumulated last week.
The company intends to expand the domestic reach of the Internet in India and also plans to set up an International gateway. Another thrust area will be to invest in acquisitions.
According to R. Ramaraj, Satyam's managing director, about 40 per cent of the $75 million ADS will go in beefing up the infrastructure, 20 per cent to strengthen the portal development and 10 per cent on brand building.
The balance amount (30 per cent) will be earmarked for acquisitions in areas like Internet and e-commerce.
For international gateway, the company is awaiting some security clearances. This would ensure better quality of service to its customers.
Satyam (SIFY) has targeted regional ISPs for acquisitions and has started searching for partners. The company has already held preliminary discussions for such deals. Satyam is expected to aggressively pursue its acquisition strategy now that the IPO is complete.
Besides, Satyam is also considering opportunities to acquire sources of content for its Internet portal. According to sources, for portal business, Satyam might prefer to have partners in content development than going for acquisitions.
Satyam has set a target to expand its network from 27 locations to 40 by April 2000. The company expects a "significant number" of new competitor will enter India's ISP market in the near future. The major competitor would be state-controlled Videsh Sanchar Nigam Limited, which currently is far ahead of Satyam in the rankings.
The other origins of competition, as recognized by the company, are from the well-established Indian content providers, including IndiaWorld and Rediff-on-the-Net.
However, Satyam is the second largest ISP in terms of subscription base (80,000 subscribers) in India. Satyam was the first ISP to have an IP network in the private sector and was also the first private ISP.
Earlier last week, when Satyam hit Nasdaq with a bang, the company chairman Ramalinga Raj called the listing as momentous for the Indian Company. Satyam listed its shares on Nasdaq after raising $75 million where the bids were for more than $2 billion from institutional and retail investors.
"We are excited with the capitalization we have got. We are proud to be listed on the Nasdaq," said a beaming Ramaraj, managing director.
"Investors in the US recognize and understand Indian companies that are driven by tremendous management strength," stated John Wall, NASDAQ president.
Post issue, the company will have a capital base of $5.5 million, and the share holders include Satyam Computer Services with a 59 per cent stake, UK-based CDC with 17 per cent, US-based Internet technology company Sterling Commerce 2 per cent 4.5 per cent reserved for employee's stock option plan (ESOP) and the balance will lie with the public.
Now the Satyam group is considering an IPO for Satyam Computers, the parent company of Satyam Infoway.