Credit Lyonnais sees 30 mil Net users in India by 2004
By N. Vidyasagar
NEW DELHI: Internet companies in India will increasingly move towards consolidation as the country's Net users increase to 30 million by 2004, says a report by Credit Lyonnais Securities Asia.
Second-ranked Internet companies will probably survive, the third or fourth in line will be bought out while the rest will perish, the report warns. It also reckons that Indian Interent companies will trade at a premium compared to their US counterparts. ``The higher usage growth in the initial years will ensure premium valuation for Indian .com companies,' says the report, titled India's Internet Revolution: The Web is Cast.
Credit Lyonnais' forecast of Internet users in India is contrary to the International Data Corporation forecast that estimates 17 million Indian Internet users by 2004. "In this high growth environment, a deluge of .com companies is likely to arrive," predicts the report.
In addition to e-commerce revenues of $4 billion, India will generate Internet advertising revenue of $100 million by 2004, says the report. It estimates the Indian Internet target market to reach 35 million households in 2002 and 47 million in 2005.
The report sees a 15-30 per cent fall in PC prices as the key driver for higher Internet usage in India. "Website quality is an important determinant of valuation," it says. At present, 90 per cent of users in India use the Net for e-mail, chat and job searches. Credit Lyonnais infers Internet companies that broaden this and move to the next layers will be the real winners. The report cites the example of Satyam Infoway which thought it worthwhile to pay a hefty Rs 5 billion to acquire Indiaworld. "The attrition rate of Indian .com companies will be high," says the report.
The report points out that Indian Internet business models are in early stage of development and a clear picture will emerge only three years down the line. First-mover advantage, quality of management and future strategies will be critical elements in determining the success of .com companies, the report maintains. A recognised brand name will impose an entry barrier, it adds.
The report says there is scope for innovators but Indian companies have to adapt to the typical retail market characteristic in India. "A visionary and innovative person or management would be in a position to identify opportunities in a rapidly evolving market and move into the right areas," it notes.
"A shakeout in the Internet service provider business is imminent," it warns. Declining Internet access rates and access through cable and alternative channels like cyber cafes will expand Internet usage in the country, it adds.
The report reveals a new trend: popular Indian websites do not have to target non-resident Indians. "The focus has shifted to the local Indian audience," it says.
indiatimes.com |
