Mumbai: In another step to give shape to Mukesh Ambani’s plans of offering high-speed wireless broadband services to Indian consumers, Infotel Broadband Services Pvt. Ltd—owned by Reliance Industries Ltd(RIL)—has acquired a 38.5% stake in Extramarks Education Pvt. Ltd, a Noida-based firm focused on school education and digital learning.
In a statement issued on Tuesday after market hours, Infotel announced the acquisition through an affiliate company, Reliance Strategic Investments Ltd.
Infotel did not disclose the amount it paid for the stake.
RIL in June 2010 bought Infotel Broadband Services after Infotel emerged the sole winner in a government auction of high-speed broadband spectrum in all 22 telecom zones in India.
The purchase gave RIL the means to roll out digital services; the investment in Extramarks will help in securing content.
“The investment by Infotel will enable Extramarks to pursue its aggressive growth plans in further developing services and wider market penetration,” Infotel said in a statement on Tuesday.
“Extramarks’ digital distribution model will provide invaluable services to the student community across age groups, including education support and study help at affordable prices.”
Analysts said companies looking to have a significant presence in the fourth generation (4G) wireless technology space, like RIL aspires to, will increasingly look at such strategic acquisitions and eventually offer a bundled package comprising a digital device, broadband connection, and content.
“Developing content to be offered over broadband is very important—be it education, healthcare or entertainment,” said Romal Shetty, head of the telecom practice in India at international audit and consulting firm KPMG. “There has been little focus on developing quality content in India till now and that has to change if 4G has to succeed since merely browsing web pages can generate data traffic but not revenues.”
In the quest to acquire such content, telecom companies will try and come in as angel investors in start-ups engaged in developing the same to help them grow and make use of their intellectual property, Shetty said.
Another expert tracking the telecom sector with an international audit and consulting firm said companies like RIL will have to look at bundling data services along with a device to access them to be successful.
He declined to be identified.
“Divorcing data services from device management won’t work in the larger scheme of things,” this analyst said.
He cited the example of CDMA (Code Division Multiple Access) mobile phones when they were first launched in India, and came with some in-built value added services that was an additional source of revenue for telecom operators.
Shetty also said it is important for companies like RIL to try and build an “end-to-end ecosystem” by traversing the value chain from loading content onto a broadband platform to rolling it out on a tablet-like device.
“In a country like India, where such services can be offered on a mass scale, it is possible to develop a low-cost device to access them.”