Essar Group’s handset retail chain The Mobile Store is looking to raise $75 million for acquisitions and expansion in the country. Business Standard reports that the company would sell a minority stake to the raise the money from foreign and local private equity firms.
With this bundle of equity, will the company do what competitor Spice Group recently did by acquiring Cellucom India’s retail store network? Other players in the market include the TV18- backed MobileNXTand Univercell. Will they be on the radar? Or will The Mobile Store choose to spend part of the money on buying out local stores that belong to the unorganized sector. The Mobile Store has 1400 stores under it yet it only has 6% of the market share. The market for handset sales is fragmented and belongs overwhelmingly to the unorganized sector.
To take on the unorganized sector and thousands of neighbourhood stores that sell handsets at lower prices, top ups and SIMs, retail networks started offering more products and services in their modern stores. The Mobile Store offered mobile accessories, music and gaming gadgets, DTH packages and services like bill payments, mobile repairs and exchanges. MobileNXT chose to offer customers a stand-in handset during maintenance/ servicing while Univercell offered door delivery.
However, with the recession, sales of handsets are dropping across the globe and now retailers are building scale to make up for this fall. The Mobile Store‘s bullish expansion plans include reaching a target of 1800 mobile retail outlets by the end of the decade and 2500 by the next two years. Univercell also has definite plans to expand in 2009-10, IndiaRetailing.com reports. Unless they get the right locations at the right prices, this could end up raking up further losses for the retailers, and they could wind up bankrupt like Subhiksha Mobile. Read this report on Subhiksha’s downfall on Rediff.
The Mobile Store will also launch its own range of branded handsets this month. The handsets will target youth and priced between Rs 2500 and Rs 10,000, ET reported. It hopes to sell around half a million of them this year. There is already a multitude of brands, copies of brands and bundled handsets flooding the market so one more will not make a dent in the market.
Meanwhile handset maker Reliance Communications is expanding its retail and consumer outlets network in Punjab. The telco plans to open 82 more mobile stores to sell its CDMA and GSM handsets, products and services exclusively, ET reports.