At $18.71 million, Sify’s consumer business accounted for only 11% of its total revenues of $156.93 for the 2009-10 fiscal, declining year on year by as much as 35% from $28.92 million. For the quarter ended March 31st 2010, Sify’s consumer business reported revenues of $3.5 million, as opposed to $6.03 million a for the corresponding period last year. All performance indicators (see two years of data in a table below) show that Sify has not been able to turn around its consumer business; I think they should have tried to sell it long ago.

On a positive note, the company reported Net Profit for the year was $1.01 million as against a Net Loss of $18.87 million in the previous year, though that was due to a one-time realization from “legal matters” under other income of $12.66 million during the third Quarter. While Sify has declined comment on it, citing to us confidentiality agreement, we believe this is due to an out-of-court settlement of its case with Yahoo India.

While Sify’s enterprise business continues to grow well, the consumer business, which we focus on, appears to be struggling to stop its decline. Modeled initially on AOL, Sify has evolved, over the past couple of years, into primarily an enterprise services business. It’s consumer business comprises of Portals (Sify.com, samachar.com etc), broadband services and cybercafes (e-ports).

Portals

During the quarter, Sify launched Samachar.com on mobile, aggregating content from newspapers, magazines and websites; I guess it wouldn’t be very different from what Samachar founder Rajesh Jain launched as NayaNaya.mobi. The company also inked deals for video content EROS, I-Stream & ANI for their video section.

Broadband: Tweaking Plans, Targeting High ARPU Customers

Despite the launch of free broadband on offer for advance payment of periods such as three months, six months and a year, Sify was unable to reduce broadband churn. Quarter on quarter, the number of broadband subscribers declined 12% to 106,000 from 121,000. Year on year, this decline was 36 percent. The number of cable operators signed up with Sify as franchisees to offer broadband to users, also declined marginally to 1967 from 2011.

What’s interesting is that Sify rolled out wireless towers in key markets, and will be targeting the small-office- home-office and retail space, with speeds of 2 Mbps, enhanced quality of connectivity (so Sify claims), free e mail IDs, domain name and web hosting template services. The company claims to be signing up customers in this segment, with expected ARPU of as high as Rs 3600.

eLearning

Sify won 10 new customers during the last year, but says its revenues from the segment were lower thane xpected due to the loss of their two largest customers. They expect new businesses to offset the loss in the coming year.

Cybercafes and VAS

The company, which has been in the process of revamping its consumer services business, said that they’re the final phase of testing value added services across cyber cafes (e-ports), broadband and Sify.com. They currently have 1227 operational e-ports, and claim that 500 of those make a “sizable” amount of revenue through value added services, though the company hasn’t mentioned what it means by “sizable”. The number of ePorts in operation declined 11 percent quarter on quarter and 31 percent year on year.

Sify’s association with NIXI, the National Internet Exchange of India, has been renewed; over 30,000 candidates completed the course and received certificates from Sify- NIXI last year. Select colleges and training institutes have signed agreements with Sify to conduct online examinations at ePorts. The company entered into tie ups with VIA for air tickets, Red Bus for bus tickets, and IRCTC for railway tickets, via ePorts.

Related:
Sify Posts Net Profit, Settles Case Against Yahoo?
–  Sep09: Sify’s Consumer Business Slides; Expects Price, Margin Decline
Sify Hives Off E-Learning, Software Business; FY09 Portals, Access Business Details