The HCL group’s recently-launched internet service provider arm, HCL Infinet, is keeping its purse strings tight and fanning out geographically, by riding on parent HCL Infosystem’s technical and sales infrastructure.
So, while other ISPs with less distinguished parentage remain confined to the bigger cities, HCL Infinet has rolled out to cities like Guwahati, Varanasi, Allahabad, Amritsar and 38 other locations within seven months of its launch. The reason is simple. HCL Infosystems is among the largest PC sellers in the country, with presence in 150 locations.
So, in most places, HCL Infosystems’ 100-per cent subsidiary HCL Infinet didn’t need to buy any office space or hire staff.
Satyam Infoways, however, has as much reach as HCL Infinet, though they have adopted the franchisee model for many smaller cities. The cost of adding an additional city has been around Rs 30 lakh for HCL Infinet, which helps in keeping their customer acquisition cost on the lower side.
The company expects 2/3rd of its revenues to come from the corporate sector, as the home segment has been a letdown for all ISP players. The company has priced its consumer pack at Rs 299 for unlimited supply, which is the prevailing norm.
The analyst points out that the ISP industry kicked off with decent charges of Rs 12/hour in the late 90s, but price war in the last two years has pushed rates to ridiculously low levels.
In a tight market, therefore, HCL Infinet’s strategy is clearly to hold on to dear cash. The company, at present, has around 62 people, with only 31 in the marketing works.
HCL Infinet was launched with a capital of Rs 15 crore, and the company feels that they would break-even in three years.