Planet41 to raise Rs. 500 million to fund 3G VAS products and services thru IPO

India’s mobile market continues to grow at a staggering rate, connecting around 10 million new citizens every month. But even in a country with a population of over 1 billion and a mobile penetration rate of just 40 percent. As 3-4 new entrants will flood the market with new services, products and offers to attract new subscribers and will compel existing subscribers to join their network.

Last year, India sold off a raft of new GSM licenses, which were snapped up by firms backed by foreign operators such as Norway's Telenor, Japan’s NTT Docomo and UAE's Etisalat. And then there are next January’s long-awaited 3G auctions, which have been tweaked recently by regulators to encourage new entrants and further foreign investors.

That this situation is sustainable at all is down to India’s unique regulatory framework, which divides the country into 23 telecom service areas each with its own unique market dynamics and market players (in terms of size, it's worth noting that at least half of these areas comprise a population base greater than the UK). These service areas are then grouped into a further four categories (or ‘circles’) based on their revenue potential, ranging from the most lucrative urban ‘Metro’ circle (comprising India’s largest cities of Chennai, Delhi, Kolkata and Mumbai) to the increasing rural A, B and C circles.

The fact that India’s subscriber growth is increasingly concentrated in the rural - and usually poorer - B and C circles highlights the challenge faced by local operators in a market where 75 percent of the population live on less than US$2 a day and ARPU is among the lowest in the world. Against this backdrop, the prospects for smaller players or new start-ups turning a profit look increasingly bleak.

The new Wireless Intelligence study – Indian 3G Market Assessment – estimates that the total 3G market in India will reach 60 million connections by 2013, accounting for an estimated 7.5 percent of total mobile connections by this point.

With the introduction of Mobile Number Portability by April 2010 and 11 digit conversions, we see a great opportunity for us for our specialised VAS products and Data transfer product UMS36.

Planet41, the new upcoming Indian mobile VAS provider plans to raise approx Rs. 500 million by tapping Indian capital market to fund mobile VAS infrastructure, products, services and content for 3G. The details are being worked out and Keynote is appointed as the Merchant bankers and Big Share as registrar.