Sony Ericsson in Talks to Buy Indian Mobile Phone Manufacturer

It is being reported that Sony Ericsson is in talks to buy India based handset manufacturer, Spice Mobile. The company is currently a subsidiary of the BK Modi group and sells phones under the Spice brand.

BK Modi controls 64% of the handset manufacturer and is understood to be looking for a sale which would value the company at around US$164 million - which is about three times its current stock market valuation.  

A top source in the Spice group confirmed to The Economic Times that while talks were on, the deal had not been finalised. The source also added that initially, Spice Mobile had approached Sony Ericsson for a "wide-ranging collaboration and partnership", but as the talks progressed, it was felt that an acquisition would suit both companies better. "If Sony Ericsson were to acquire more than 50% in Spice Mobile, it will have to make an open offer as per our regulations. They want to acquire a majority stake, but it has not yet been finalised if it will be a 100% buyout," the source added.

Spice Mobile sells around 200,000 handsets per month in India - predominantly in the low cost end of the market. Sony Ericsson sells about twice as many phones per month and a combined company would take the second spot in the market, overtaking Samsung which is reported to sell around 450,000 handsets per month. Nokia's sales are in a totally different league - rumoured to be in the region of 3 million handsets per month.

Spice currently uses OEM manufacturers for its supplies but is shortly launching its own Indian handset factory. Earlier this year, the company launched its first 3G CDMA phone and projected sales of half a million units by the end of this year.

On the web: The Economic Times

Posted to the site on 11th July 2008