Handset maker Lava International Ltd has formed a venture with an Egyptian firm to enter the African market, chairman and managing director Hari Om Rai said on Thursday.

Lava has signed an agreement with Egyptian cosmetics and beauty products maker Easy Group for a joint venture to sell its handsets in Egypt.

The company, which expects to report revenue of $1.5 billion in 2016-17, expects to start phone shipments in the next four to five months, and will initially sell phones in the $300 bracket.

Egypt is the second largest mobile market in Africa, with sales of about 1.5 million handsets a month, the company said.

Egypt is looking to increase Internet penetration to 50% by the end of 2016, according to a Reuters report.

Lava is aiming to capture a 20% share of the Egyptian market, where Samsung Electronics Co. Ltd, Huawei Technologies Co. Ltd and Lenovo Group Ltd are among the popular brands. Lava will be the first Indian company to enter the market.

“These markets are quite open for new players including companies like Lava and Chinese players like Xiaomi, Oppo and Gionee," said Anshul Gupta, research director at Gartner, adding that Lava has experience in tapping international markets.

Lava generates half its current revenue from sales outside India and expects more than 50% of its revenue to come from international markets starting next year, Rai said.

The company sells its phones in several international markets, including Thailand, Bangladesh, Indonesia, Mexico and Pakistan.

“The basic strategy to tackle the competition here is to have a tie-up with a local player abroad who has the know-how when it comes to distribution," said Tarun Pathak, a senior analyst at Counterpoint Research.

Lava has divided Egypt into 50 distribution territories and plans to set up 1,500 retail points with the help of Easy Group.

“The partnership will create 2,000 direct and 5,000 indirect employment opportunities in the next six months and over 10,000 employment opportunities in the next five years," the company said in a statement.

Lava was in fourth place with a share of 8.6% of the overall Indian handset market in the second quarter of 2016, according to Counterpoint Research.

However, in the smartphone segment, Lava slipped out of the top five, with Reliance Jio Infocomm Ltd’s Lyf range of phones capturing 6% of the market in the second quarter.

The company has earmarked an overall investment of 2,615 crore for expanding its existing manufacturing units along with setting up new ones to increase production capacity to 216 million units per year in the next five to eight years.

This includes the company’s manufacturing plant in Tirupati, Andhra Pradesh, which will become operational in 2017 with a production capacity of 5 million phones a month.

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