On Sify’s E-Port Express…

We’ve written in the past about Sify converting its cybercafes into E-Ports, and introducing the kiosk model with the e-port Express.

I got a chance to see the compact Sify E-Port Express at the India Telecom 2008 exhibition (not try out because free internet access means long queues).

Sify is looking at the e-port Express as a B2B business, much like its cybercafe business. It is being sold to malls and retailers at a one time cost of Rs. 40,000 (plus taxes) for an HCL computer and a Canon printer, and the kiosk. Over and above this, there’s also an installation charge of Rs. 500, and a monthly fee for Internet connectivity, which ranges from Rs. 300 for a limited connection to Rs. 1100 for an unlimited connection; Sify makes money off the connection, but retailers are also allowed to tie up with other service providers.

Monetization for the retailer can come by way of charging for internet connectivity (entirely up to the retailer), and a Rs. 5 service charge levied on services like bill payments (electricity, insurance, telephone), mobile recharge, Itz Card rechanrge, tax payment, etc.

To be honest, I’m quite skeptical about the E-Port Express model…many have run kiosk pilots in India, but there hasn’t been mass scale deployment. I think the primary usage for E-Ports will be for Internet access and not bill payment, which means that retailers can set up a similar kiosk system for much less than Rs. 40,000. Not very promising this, from Sify.

Related:
– Sify Consumer Business Revenue Down 7% To $7.5 M; Drops Broadband Rates To Stem Decline

Sify Communications To Merge With Sify Technologies, Combining ISP With NLD/ILD Licenses

The board of Sify Technologies Ltd has approved the merger of its subsidiary Sify Communications into the company. Sify Communications, earlier known as SafeScrypt, was essentially an enterprises services company. 

Interestingly, according to the SEC filing, Infinity Satcom, an entity controlled by Sify Technologies CEO Raju Vegensa, is a minority stockholder of Sify Communications. According to a 2006 story in the Hindu, Sify had sold 26% stake in Sify Communications (then Safescrypt) to Infinity Satcom for $3.1 Million. 

As we had reported during the announcement of the VoIP recommendations, Sify and Sify Communications stand to benefit significantly if the Indian government accepts the recommendations, and a policy is announced: Sify Technologies Ltd has an ISP license in India, and Sify Communications has an NLD/ILD license. With the merger, a single entity will own both the licenses, and hence will not have to pay any carriage fee. Sify can offer calling cards and VoIP services, or even offer VoIP as a significant value-add over its WiMax/Broadband services. Sify’s access business has been on the decline.

The impact the announcement of the merger is not insignificant: Sify’s share price had gone to $0.42, but following the announcement, has recovered to $1.75, and is currently trading at $1.16. Interestingly, the Sify board had deferred the merger earlier this year, but decided to go ahead given the financial crisis. This also means, that Sify will not be raising funding separately for Sify Communications.

Do note that while the TRAI has been, well, announcing recommendations and discussions as if on steroids, over the past month, the government still has a number of issues related to telecom to resolve - most importantly, the 3G Auction. So it’s likely that VoIP will be taken up after the next elections, and if a different government is elected, the process may take even longer.

Related:
– Sify Consumer Business Revenue Down 7% To $7.5 M; Drops Broadband Rates To Stem Decline
– Impact Of TRAIs Internet Telephony Recommendations; Sify To Benefit
– Regulator Recommends Unrestricted Internet Telephony In India; Separate Numbers For VoIP

Sify Consumer Business Revenue Down 7% To $7.5 M; Drops Broadband Rates To Stem Decline

I wonder how long Sify will continue to hang on their consumer business - finding a buyer in the current financial crisis won’t be easy. Not that the company has disclosed any plans to sell the business - but the decline in the consumer business, the longer they take to get rid of it, the less it will be valued at.

What’s telling is that the only question on the earnings conference call, was about how much of an impact on its bottom-line does Sify expect, if they reach a settlement with Yahoo. Sify declined to comment since the matter is subjudice.

Consumer Business

The quarter ending September 30th was yet another poor quarter for Sify - revenues for the consumer business declined 7.46% quarter on quarter - down to $7.50 million, from $8.06 million last quarter.

Broadband Rates Reduced, ARPU Decline: In what appears to be an effort to stem the decline of their broadband subscriber base, Sify has dropped Broadband access prices to Rs. 95. Consequently, Sify’s ARPU has further declined to Rs. 305, from Rs. 316 at the end of the last quarter, and Rs. 336 at the end of Q4 of last year. At the same time, the Sify has reported a decline of 10,000 in their broadband subscriber base, despite an increase in their Cable Operator network.

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Sify Hands Over Mail To Google; What About Indic Language Mail? Redesign; Antzill

Update (Aug 28): So Sify.com has been redesigned…and the design is line with the current trend of using Yahoo’s design as a benchmark. Take a look at Yahoo, then AOL and Sify. Is certainly an improvement over the older version.

Original post (Aug 27): Another bullet point in the history of the decline of Sify’s consumer business: the company has handed over the management of its mail service Sifymail to Google. Google is providing chat and other services which are a part of the Google Apps portfolio to Sify.

I just signed up for a Sify account, and Googles service isn’t active yet. Trying out Sifymail, I couldn’t help but agree with Chairman & CEO Raju Vegesna - “Our agreement with Google makes superior applications available for communications and collaboration…”

Still, I wonder what will happen to the email in 11 languages, which Sify had announced in 2006? Sify’s consumer business saw an 18 percent decline in revenues year on year, last quarter. Our sense is that it has largely been dependent on the access business, which has also been on the decline:

Sify, which restructured a few quarters ago, appears to be focusing more on its enterprise services business. Not surprising, given Vegesna’s background. While it still has some remaining traction, why not sell the consumer business?

Perhaps Sify.com, which is being redesigned, is being dressed up for a sale. (updated above)

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While at Sify.com, I also case across a games portal called Antzill, which we haven’t heard of before. It’s currently in beta, and has both casual games and an MMOG which Sify has been running in India for a while - A3

Q1 Results: Sify Consumer Services Biz Continues Decline - Revenues 18% Down; Sify.com Relaunch In Q2

With revenues 18 percent down year-on-year, Sify’s consumer business segment continues to decline. At the same time, revenues from the enterprise business have grown by 17 percent, and Sify appears to be transforming well and truly into an enterprise solutions company. On the whole, the company ended Q1 08-09 with revenues of $35 million, and a net loss of $2.39 million

Some notes from the earnings release on the consumer business:
Sify Broadband: expanding services in North East India - into Shillong, Aizawl, Silchar, Tezpur, Nagaon and Agartala.
e-Ports (cybercafes, formerly iWay): Expanded to 28 new cities, with over 2000 e-ports across 180 cities and a claimed subscriber base of over 200,000. They’ve added a net 30 cybercafes in the quarter, and some orders have been received for kiosks (eport Xpress).
Sify.com (horizontal portal): tied up with SET for reality shows Champion Chaalbaaz and Dus ka Dum. The site and some channels (Sports, News) were revamped.
WiZone (WiFi service): Wireless broadband has been launched in 9 cities in June and will be expanded to 30 cities. Note: the website mentions only Bangalore and Chennai

Sify’s consumer businesses also include Way2Talk (Internet Telephony service), imeet (Video conferencing) and Gamedrome (gaming cafes), but there are no updates on these in the earnings report.

Perhaps it’s premature to be announcing the death of Sify’s consumer business - Raju Vegesna, Chairman, CEO & MD of Sify Technologies says that the impact of the restructuring of the consumer business will be felt after the second quarter of this financial year, which is when Sify’s portal will be relaunched.

Our take: Consumer Business Too Dependent On Access; Slow Growth, Long Struggle

Sify’s dependancy on the access business has been a cause for concern - the Broadband and cybercafe business delivered significant traffic to the portals. With the growth of other broadband access service providers like MTNL, BSNL, Airtel and Reliance Communications, as well as the decline in cybercafe business (compounded by the increase real estate rates), the access side of the business could be a concern.

While investing in Wireless Broadband and kiosks is a solution, WiFi will require significant distribution for uptake, and is dependent on laptop sales; Not until there are thousands of access points will consumers choose WiFi zone, and even then, there’s competition from the likes of Tata Communications (Indicom) which also has its own WiFi Zones. The kiosk model is yet to work for anyone in India, and the distribution will be costly, and we really can’t comment on the success of such a model. The access business is an expensive proposition for Sify, and it is competing against telecom operators in this segment.

Release