The Telegraph
Tuesday , April 15 , 2014
CIMA Gallary

Micromax calls up South Korean firm

Seoul, April 14 (Reuters): Micromax Informatics Ltd, India’s No.2 smartphone maker, has expressed interest in buying a stake in South Korea’s Pantech Co Ltd as part of its drive to expand overseas and go upmarket, two sources said on Monday.

Pantech, South Korea’s No.3 smartphone maker, has been under a debt-restructuring programme after suffering six consecutive quarters of losses because of fierce competition.

“Micromax told Pantech that it was interested in a stake in the company,” one of the sources said, declining to elaborate on the size of a potential deal and other details.

Nine creditor banks own a combined 37 per cent of Pantech, while Qualcomm Inc has a 12 per cent stake and Samsung Electronics, 10 per cent.

If the deal comes through, it will be the first overseas acquisition of a foreign company by an Indian player.

“Micromax is among those who are interested in Pantech,” another source said.

The two sources declined to be identified because of the confidentiality of the sales process. High-end smartphone maker Pantech has struggled against competition from giant rivals Samsung Electronics and LG Electronics in South Korea, where nearly 70 per cent of mobile users have smartphones.

Gurgaon-based Micromax in a statement, however, refused to make definitive comments.

“Any matter such as partnership or acquisition is subject to approvals by the Micromax board and statutory rules and regulations. No such matter is currently under consideration of the Micromax Informatics board. As a company policy we do not comment on market speculation,” it said in a statement.

Micromax clocked revenues of Rs 3,168 crore for the year ended 2012-13 and is expected to cross the billion-dollar mark by the end of 2013-14. It has a 17 per cent market share in India.

Globally, it is the tenth-largest among smartphone makers, widely known for its Canvas and Bolt range of phones. It has ventured into tablets, too. Overseas, it is present in the SAARC nations and Russia.

“South Korea is sophisticated and developed as a market and it will help Micromax get an insight. It will be able to lay hands on a Korean asset. Pantech is under stress financially and it will be a distressed purchase if it were to happen,” said Jaideep Mehta, general manager (South Asia) at IDC, a market intelligence firm.

Pantech also sells phones in markets such as the United States and Japan.

Micromax has brought smartphones to the masses in India’s price-sensitive market where basic handsets still dominate.

With inputs from Calcutta Bureau