Taiwan based chip manufacturer Mediatek will invest $20 million in in Indian Mobile VAS company Spice Digital*, the company has announced. Reuters reports that MediaTek will pick up 10 percent in Spice Digital, which effectively values the company at $200 million.

MediaNama had heard about this potential deal over a month ago, but was unable to confirm it from internal Spice Digital sources.

Spice Digital is among the largest mobile Value Added Services companies in India, providing services across Voice, IVR, SMS, USSD, WAP, 3G & Mobile Applications, and the Spice Group has been looking to expand the mandate of its Spice Mobility business (of which Spice Digital is a subsidiary) to include the Mobile Internet as well. Spice Digital recently launched an e-commerce site Saholic.

Our Take

The Spice group has been working with MediaTek for quite some time, and was among the first domestic Indian handset manufacturers to incorporate the MediaTek platform for low cost Java based feature phones. MediaTek powers the chipsets for many feature phones in the market – companies like MicroMax, Lemon, Karbonn, Intex, Olive, Videocon, among several others.

The company has been trying to get attract service providers and media companies to add services and applications to its platform offerings, which in turn will attract more handset manufacturers for deploying MediaTek’s platform. A stake in Spice Digital benefits both MediaTek: it cements the relationship between MediaTek and the Spice Group for handsets, and also may lead to services from Spice Digital being pre-embedded/enabled on MediaTek. Remember that Spice Mobility wants to become a ‘Mobile Internet’ company, and this change will probably be led by Spice Digital, alongwith Spice i2i in South East Asia. There’s a restructuring in progress at the Spice Group. Details here.

Disclosure: Spice Digital is an advertiser with MediaNama.

Additional Reading:

Implications Of Yahoo-MediaTek Partnership For Yahoo India
Spice Mobility Plans Modular Structure For Services Business; Company Of Companies
Spice Mobility To Be Renamed S Mobility; FY11 Profits Up 106% Post Merger
S Mobility To Pick Up 20-10% In ASSOCHAMs Rs 200 Crore Fund: Report
Spice Mobility Plans To Become A Mobile Internet Company