BG to divest Iqara stake

Citigroup likely to pick up BG's 26 per cent stake.

British Gas (BG) will divest its 26 per cent equity stake in Iqara India "" an internet service provider (ISP) "" by September this year. It is known that Citigroup has evinced interest in investing in Iqara and picking up BG's stake in it.

EVS Chakravarthy, chief executive officer, Iqara India, said, "BG has 26 per cent stake in Iqara and will divest it by September 2006, at the end of a five-year agreement between BG and Iqara India. BG stopped providing funds to Iqara long ago."

He added, "Several private sector financial institutions have shown interest in taking stake in Iqara. Citigroup is one the institutes which is interested in investment in our company."

Chakravarthy said, "We are looking for other alternative investors when BG makes a move and divests its stake in September 2006," adding, "if we cannot not find a suitable investor to pick up BG stake in the company, we will urge BG to extend the agreement."

Talking about the survival, he said owing to stiff competition with telecom companies, it had become very difficult for ISPs to survive.

"Any ISP providing low-cost service with good infrastructure would be able to compete the telecos providing internet at low cost," said Chakravarthy.

"It is not only telecos, even cellphone operators are entering the retail segment making it even more competitive," he added.

"Currently, we are present in 10 cities and want to expand our network in these cities," said Charavarthy. The 10 cities, he said, were Ahmedabad, Surat, Vadodara, Mumbai, Pune, Vishakhapatnam, Hyderabad, Bangalore, Chennai and Gurgaon.

As it is mandatory for BG to divest its stake in Iqara India as per the agreement, Charavarthy said "we are looking for the alternative as early as possible".