HOT NEW ISSUE...Is Satyam the AOL of India?
By John E. Fitzgibbon Jr.
Redherring.com
October 15, 1999
India's second largest Internet service provider,
Satyam Infoway, plans to strike it rich on Wall Street
next week when Merrill Lynch (NYSE: MER) and
Salomon Smith Barney offer $54.3 million worth of
American Depositary Shares to international investors.
Satyam launched in November
1998, after the deregulation of the
ISP market in India. The
company was the first private ISP
provider in the country and, in
terms of customers, is second
only to the Indian Government's
majority-owned Videsh Sanchar
Nigam Limited.
HOWDY PARTNERS
The company offers dial-up Internet access, email, and
Web page hosting to consumers in India through online
registration and user-friendly software. As of August
1999, the company had more than 77,000 individual
consumers and more than 300 corporate customers.
Satyam has formed strategic
partnerships with companies such
as America Online's (NYSE:
AOL) Compuserve Network
Services, Sterling Commerce
(NYSE: SE), and Open Market
(Nasdaq: OMKT) to offer related
content sites specifically tailored
to Indian interests worldwide. The
sites cover information on the
latest news, personal finance, movies, music, and
automobiles. During August 1999, the company's six
Web sites generated about 6.5 million page views.
IT research firm IDC is estimating rapid growth for the
Indian Internet access and electronic commerce
markets, projecting that the installed personal and
network computer base in India will grow at an
average 44 percent annual rate to 8.2 million in 2002,
up from 1.9 million in 1998. Internet users are
expected to grow at a rate that averages 76 percent
annually to 4.5 million by 2002, up from 0.5 million in
1998. And Internet commerce revenue growth is
projected to grow at a 260 percent rate by 2002 to
about $594 billion, up from $3.5 million in 1998.
BREAKING INTO THE BLACK
For the year ended March 31, 1999, the company
reported revenues of Rs103.3 million ($2.4 million) up
from Rs6.8 million in 1998. And for the quarter ended
June 30, 1999, revenues soared by 360 percent to
Rs80.9 million ($1.86 million), up from Rs17.6 million
a year earlier. Although losses are mounting, an
occupational hazard for Internet firms, the company's
revenues exceed its losses for the June 1999 quarter,
and that's unusual.
Currently, the company owns and operates points of
presence in 25 of the largest metropolitan areas in
India, and plans to expand to 40 cities in India by April
2000. The company believes this will allow it to
provide Internet access service via local telephone
lines to nearly 85 percent of the installed personal
computer base in the country.
The first Indian IPO that came to market in the U.S.
was Infosys Technologies (Nasdaq: INFY), which
was priced on March 11, 1999. Infosys develops
software, turnkey projects, and products for the
banking, telecommunications, and manufacturing
industries. Its shares were priced at $34 each and it
closed its first trading day at $46.88, up 38.8 percent.
Good, but not great in today's super-charged IPO
market. Since then, the stock has been a scorcher,
having hit a high at $179.50 a share on Monday,
October 11, up 427.9 percent from its offering price.
Turning back to the newest Indian company planning
to come public in the U.S. IPO market, Satyam
Infoway is now Hot, according to IPO experts.
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