Extramarks Education, a provider of digital delivery of education related services has sold 38.5% stake to Infotel, which owns 20 MHz of high speed BWA spectrum across India. Reliance Industries had acquired 95% in Infotel shortly after the BWA auction finished.

Extramarks, according to its website, provides interactive learning resources to schools, teachers and students through digital distribution. It focuses on students in classes 6th to 12th and provides after school study programmes for classes, including model test papers, Q&A related to specific course material, mindmaps, live virtual classes.

On Infotel’s Leverage

One problem that online businesses have faced is the comparatively limited user base, and even though there are several companies providing digital education to students through the Internet, there is a limit to how many schools, students and teachers can be reached given that broadband connectivity is rather limited.

By acquiring stake in Extramarks, what Infotel (in our opinion) is suggesting is that it won’t just be a plain pipe and let any content ride on it. To us it indicates that it might just well be selective and give preferential treatment to some service providers as a part of “Broadband VAS”. For example, Airtel tied up with LearnNext for digital delivery of content.

There have been rumors in the mobile industry that some managers managing MVAS services for telecom operators were taking sweat equity in VAS startups to give them access to the mobile consumer. But nothing stops mobile operators and broadband companies themselves doing this – instead of asking for revenue share to let companies through the gate, they begin taking equity.

So our question to Infotel on this would be – has some stake been acquired in exchange for money invested, and some for access to consumer? Our take on this is that the pipe should be neutral, but following this investment, it may not be.

The Extramarks acquisition has been made through an affiliate of Infotel’s: Reliance Strategic Investments Ltd.