HCL Info enters West Asia, Africa telecom markets

HCL Infosystems, the biggest Indian IT hardware brand and distributor, has announced its entry into West Asia and African telecom market through an acquisition of undisclosed size.

HCL Info, which has found margins narrowing on many of its traditional revenue areas such as distribution of Nokia phones in India and selling of HCL brand PCs, has agreed to acquire 20% of the subsidiary of Dubai-based Techmart — one of the biggest distributors of Nokia globally. Techmart has a non-exclusive distribution licence from Nokia for West Asia and Africa.

The agreement, however, is for acquiring Techmart Telecom — a subsidiary Techmart floated in July this year for distribution of Nokia smartphones in the Middle East and Africa.

The agreement, executed through HCL Info’s Singapore subsidiary, gives the Indian firm an option to raise its stake to 51% if it wishes to, at a later date.

“We will take a decision on whether or not to acquire the remaining 31% based on the performance of the unit,” said an HCL official, preferring anonymity due to company policy.

The India distributorship of Nokia is HCL Info’s biggest source of revenue and the acquisition is seen as a logical extension of the firm’s Nokia business to Africa and Middle East.

Africa is considered the last continent where prospects for strong growth in mobile telephony exist. Indian telecom operator Bharti Airtel recently bought out Kuwait-based Zain Telecom’s businesses in Africa for more than $12 billion in what was seen as an attempt to keep growing as the domestic market races towards saturation.

HCL Info, which is unofficially estimated to generate nearly a third of its revenues from its Nokia business, has faced headwinds in both its handset as well as branded PC business.

According to market research firm IDC India, Nokia saw its marketshare slide alarmingly to 31.5% from 36.3% in just three months ended September.

The acquisition will give HCL Info a crucial opening into the Middle East and Africa — one of the few zones where Nokia still has a large marketshare, besides India. However, company officials pointed out that the acquired firm will be distributing only Nokia’s smartphones, while the ‘non smart’ phones will continue to be under the parent Techmart.

"It is an opportunity to share best practices... We can bring our expertise of managing a far flung distribution and customer care operations to help the new company," said an official.