The Spice Group has acquired Cellucom India and is on its way to consolidating its mobile retail chain across the country. Cellucom India was until recently a joint venture by the RP Goenka Group and Dubai-based Cellucom, until the latter bought it over last year. It operates around 120 mobile and IT product stores in the country, while Spice Group’s Hotspot has 500 outlets. The companies have exchanged shares in a cash-less deal that gives Cellucom 26 percent stake in HotSpot while Spice Corp will buy all shares of Cellucom India. Cellucom India and Hotspot will merge into Hotspot Cellucom for now, and will be rebranded soon. Who has known Modi to resist when it comes to re-branding? The workforce of the combined chains is over 2200 employees. Hotspot’s CEO and CFO will be retained. Modi intends to invest Rs. 1 Billion in the chain, and is targeting Rs 10 billion in revenue by fiscal 2009. Is he being too optimistic? The mobile retail business is a high volume, low margin game, and most venture capitalists stayed away from it. It is also a difficult market to bet on as realty prices continue to be a cause of concern while handsets are becoming cheaper. Mobile sales, even of the low-end ones, are predicted to plummet by 10 percent this year globally. Competition Spice Groups primary competition in the retail space is from The Mobile Store, backed by the Essar Group and Virgin. The Mobile Store has 1350 outlets and employs over double the…
