Mumbai: Dominant markets data providers to the investment community Reuters India Pvt. Ltd and Bloomberg Lp are being challenged by a brash Indian upstart, NewsWire18 Pvt. Ltd.
Cost advantage: NewsWire18 CEO Pankaj Aher says the firm is concentrating on introducing cheaper, value-based products to capture the market.
At stake are attractive customers in capital markets as well as banking and financial sectors who look for real-time data on desktop computers or terminals, coupled with historical databases, allowing them to make quick, informed calls in the marketplace.
While both Reuters and Bloomberg also have large, global news operations, it is the data services that remain huge profit centres.
NewsWire18, a subsidiary of Television Eighteen India Ltd—which owns CNBC TV18 and CNBC Awaz news channels—started about a year ago. It has about 100 journalists, higher than the combined India-focused news staff of both rivals as well as a few others, a number that it says will increase by 50% in 2008.
NewsWire18 hopes to turn its India focus into a competitive advantage, noting that it covers results from about 1,000 Indian companies every quarter which, the company claims, is more than the coverage offered by its larger rivals.
On top of this, NewsWire18 says its cost is less than half the rates being charged by Reuters and Bloomberg.
Pankaj Aher, chief executive of NewsWire18, insists many Reuters and Bloomberg users are switching to the new offering and claims to have “several hundred” terminal subscribers and a business that is growing at 50% every quarter.
Mint couldn’t independently ascertain these claims. Some active terminal users in Mumbai say it is too early for NewsWire18 to dent the duopoly of Reuters and Bloomberg.
Mint spoke to several domestic and international brokerage houses and banks, such as Centrum Capital Ltd, KR Choksey Shares and Securities Pvt. Ltd, Angel Broking Ltd, CLSA Asia-Pacific, Religare Securities Ltd, Anand Rathi Commodities, Development Credit Bank Ltd and Kotak Securities Ltd. In most instances, they said NewsWire18’s penetration level was low.
“It’s too early to say that people will start unsubscribing Reuters and Bloomberg and take NewsWire18 terminal. But, NewsWire18 gives you more news than the others and sometimes it is faster too,” says Deven Choksey, managing director, KR Choksey Securities.
Amitabh Chakraborty, president of equity at Religare, says it might not be possible to easily switch loyalty. “All my clients are sitting on (using) Bloomberg. We chat, even send mails through our Bloomberg terminals. I cannot change it unless they are also changing it. Besides, once you start using a terminal, you get used to it. It is not easy to switch.”
It is estimated that there are about 5,000 terminals in India and, despite the continued rise in the stock markets, the growth in the number of terminals hasn’t kept pace.
Still, “a terminal is a compulsory tool for the daily livelihood of traders,” notes Religare’s Chakraborty. “Boom or no boom, traders need a real-time terminal to connect to the world.”
The Reuters terminal, 3000 Xtra, offers global real-time financial data and a combination of news, information and analysis as well as access to the global Reuters trading community. It is what is called an “open” system that users can install on their personal computers and run along with other programs.
In contrast, a Bloomberg terminal is a “closed” system, which doesn’t allow other programs to run on the machine. NewsWire18’s terminal is an open system.
In India, Reuters focuses on three main products—Dealing 3000 Direct, Reuters Traders for Commodities and the 3000 Xtra.
According to Samir Shah, managing director and senior company officer for Reuters, South Asia, about 60% of the world’s and 75% of India’s foreign exchange transaction go through Reuters’ Dealing 3000 Direct.
“Even Reserve Bank of India intervention in the foreign exchange market happens through 3000 Direct,” claims Shah. The Indian banking regulator buys dollars from the market through a few public sector banks to rein in the runaway rise of the local currency. In foreign exchange dealers’ parlance, this is called“intervention”.
Bloomberg has a similar trading platform, though NewsWire18 doesn’t offer a competing service.
“Product offering is not an issue, but we have to see if our consumers want that from us or not,” claims Aher of NewsWire18. “We are now concentrating on introducing cheaper, value-based products to capture the market”
Bloomberg did not respond to email questions sent by Mint.
“Reuters is strong in fixed income and treasuries, but its terminals are slower than Bloomberg,” says a bond dealer with a non-banking financial services company who didn’t want to be identified.
All companies are active in coming up with new offerings.
In October, for instance, Reuters launched a text messaging service for Indian farmers with news, advice on commodities and weather information. Costing Rs60 per month, the new product, called Reuters Market Light, has about 5,000 customers in Maharashtra. If successful in that state, Reuters plans to launch it across India and eventually in other agriculture-oriented countries in Africa and South America.
NewsWire18 says it will launch mobile services early this year to cater to institutions as well as individuals.
The cost of a NewsWire18 terminal is cheaper than competition based on rack rates. While a 3000 Xtra costs the subscriber $1,500 (Rs59,250) per month, per user and a subscriber has to shell out $1,800 for a Bloomberg terminal, the subscription rate for a NewsWire18 WorkStation varies between $600 and $800 per month per user, depending on the content. These prices don’t factor in any volume discounts that might be offered to various clients.
Most of the dealers that Mint spoke to say that while NewsWire18 might have penetrated the retail market, institutional users are not yet big buyers of their terminals.
“We get whatever we want from NewsWire18,” says Shailendra Kumar, head of commodity research at brokerage firm Sharekhan Ltd, adding that they provide good value for money. “Although a Bloomberg might be a better option for its international reach, it’s very costly. Not many retail investors can afford to use a Bloomberg product. My NewsWire18 terminal not only gives me instant prices, but also the latest news, analytics tool,” says Kumar, who uses both Bloomberg and NewsWire18 offerings.
Reuters notes that NewsWire18 is an “aggressive competitor”, but says it has not dented profitability or subscriber base. “We just have to provide more and more value to our clients to insulate ourselves from a strong domestic competitor,” says Shah. “India is one of the fastest growing countries in the Reuters world, and we are evaluating new opportunities, such as the ratings and indexation business. But, so far, we haven’t taken a hit” from NewsWire18.
Shah is also betting that the pending merger with Thomson Corp., set to be completed before April, will benefit Reuters’ subscribers when joint offerings from both companies start flowing in. In May, Canadian financial services provider Thomson Corp. agreed to buy Reuters for $17.2 billion. Thomson will control about 53% of the new company, to be named Thomson-Reuters.