Satyam Infoway to break even in 3 yrs
Our correspondent in Chennai
October 26, 1999, 21:30 Hrs (IST)
Chennai: Satyam Infoway, is chalking out plans to expand in a big way and is confident of breaking even in three years. The company raised close to 2 billion dollars against an issue size of 75 million dollars last week attracting over 250 global investors. With its American Depository Shares (ADS) quoting at around 40 dollars, Satyam Infoway's market cap has already soared to around one billion dollars.
Now it remains to be seen whether Satyam will be able to meet the market expectations. Last year the company made a loss of Rs 18 crores on a revenue of around Rs 10.58 crores. The accumulated losses have mounted upto Rs 30 crores since the company was incorporated in 1997. However company officials are confident of meeting the expectations.
Says R Ramaraj, CEO of Satyam Infoway, " If we were a pure play ISP I would agree that it would take a lot longer for us to break even and for revenues to reach a certain stability. The fact that we are not a pure play ISP but an integrated player in all the three areas like consumer internet access, corporate web site designing and the portal business, gives us an advantage over someone who is a pure play ISP. That is why we are uniquely positioned. Today about 60 per cent of our business comes from the consumer Internet access business. About 40 per cent come from the corporate and portal side of the business. Which means already we are having a reasonable mix and as the market starts maturing we think that the mix will become even more balanced."
Satyam is confident of breaking even in the next three years. The growth will mainly come through acquisitions. The company will invest close to 23 million dollars in acquiring Internet companies - primarily portals focusing on niche segments like travel, which could add value to Satyam's website Satyam Online.com. Out of the 75 million dollars raised another 20 per cent will go into upgrading the portal itself.
"Satyam Online.com is unique in the sense that we have both the access as well as the portal which means for our subscribers the default page that we set is Satyam Online.com itself. So there is that advantage of having a synergy between the access and the portal. The second advantage is that our focus is on local content, local advertising and local e-commerce. Close to 70 per cent of our traffic comes from within India and the rest from India interested audience around the world. That means we have already differentiated ourselves from others by having more local traffic," says Ramaraj.
Satyam Infoway will invest close to 30 million dollars in upgrading its existing infrastructure, which will include the setting up of an international gateway. Satyam is hoping that with the quality of its services going up, it will be able to improve its subscriber base significantly.
However Ramaraj refuses to give any future projections on the company's revenue. "Today we are not in a position to give out any future projections because of the quiet period we are in. But as per IDC's projections the growth of Internet in the country is expected to be close to 70 per cent over the next few years. That is a good growth rate. And being the second largest ISP I think we will be able to grow at least as fast as the market is growing," he adds.
Satyam plans to invest an additional 8 million dollars on brand building. That could make its job a wee bit easier.
Source:IndiaInfoway |
