You Telecom, Red Snapper set up JV for wireless network

The venture begins pilot in Thane.

Citigroup Venture Capital International-owned You Telecom has entered into a 50:50 joint venture with Malaysia's wireless technology and Voice over Internet Protocol (VoIP) major Red Snapper.

The JV, named YouSnapper, will focus on providing wide area wireless connectivity in India. The Mumbai-based company, which had been focusing on the wireline segment till date, has already begun a pilot in Thane (Maharashtra).

Citigroup Venture Capital International, which launched a $1.6 billion fund in 2005, had acquired an 85 per cent stake in the broadband company (formerly known as Iqara Telecoms) from British Gas in 2006.

The JV will allow You Telecom to be a part of the convergence space by providing mobility to its voice, video and data services, said the firms's CEO EVS Chakravarthy.

You Telecom's fibre optic network offers internet solutions for data and voice services across 12 cities in India. Chakravarthy plans to have a pan-India presence (26 cities) over the next 18 months. Currently, You has over 175,000 registered subscribers.

For Red Snapper, on the other hand, the JV will help get a foothold in the Indian broadband market that is on a growth path.

In addition to creating a wireless broadband footprint, the JV will also bring innovative voice packages of Malaysia to the Indian consumer, said Red Snapper CEO Braham Singh.

Red Snapper is a wireless technology player with prime focus on Wi-Fi in Malaysia. It has got the funding from Malaysian government to promote the growth of wireless broadband in that country.

Its radio frequency (RF) expertise has enabled Malaysia's top ISP Jaring (owned by the Malaysian government) to create a large Wi-Fi ecology along Malacca, Perak and Penang.

"In Malaysia, Jaring is the face of the joint venture since we cannot offer the services directly. We do the systems integration and have a revenue-sharing (30:70) agreement with Jaring," said Singh.

You Telecom, incidentally, had recently acquired an Ahmedabad-based internet service provider IceNet. It has also set up a subsidiary company, Digital Outsourcing, to kick off cable TV operations in India (started operations in Bangalore, and next in Vizag).

You Telecom holds 49 per cent in Digital Outsourcing, with the balance 51 per cent by other Indian shareholders. The capital restructuring in the cable TV company was essential as the government prescribes a 49 per cent foreign direct investment cap in the sector.

Digital Outsourcing is looking at acquiring stake in existing cable networks, says Chakravarthy.

As a first step, the company has bought 50 per cent stake in Bangalore-based Digital Infotainment, a small-sized cable network. "We are looking at making more such acquisitions," says Chakravarthy.

The company will also invest in Headend-In-The-Sky (HITS) and is waiting for the government to come out with the regulations. "We will be investing Rs 12 crore in the first phase for setting up the HITS infrastructure," he said.