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26 October 2011

Softbank and Bharti form Indian mobile web venture

The world’s most sophisticated mobile carriers are increasingly gaining influence in high growth emerging markets by sharing the secrets of their successes in mobile internet services, rather than by direct acquisition. Korea’s SKT has pursued this strategy in order to punch above its weight in China and other parts of Asia, and Japan’s Softbank is adopting a similar approach. It has formed a 50:50 joint venture with Bharti Enterprises, the parent of India’s largest cellco Bharti Airtel, to develop mobile internet services in the huge market.

Mobile web opportunities in India are vast. As well as a cellphone base of 865.7m, the shortage of telephone lines and other infrastructure means that the handset will be, for many, their first and only way of getting online.

The new venture, Bharti Softbank Holdings, will focus on three key areas of mobile activity – social networking, gaming and ecommerce. The total investment in the JV was not disclosed. Its approach will be to build inhouse teams around the three areas, as well as investing in start-ups, not necessarily Indian but focused on that market. ‘The goal is to build ourselves/invest in teams that are building for mobile,” said Kavin Bharti Mittal, head of strategy at the venture, in a Twitter message.

Bharti Airtel has 172m subscribers in India as well as divisions in Bangladesh and Sri Lanka, and in Africa after it acquired Zain’s operations in 15 countries last year. It aims to take advantage of the resulting economies of scale by pursuing cross-country purchasing and services strategies, which could extend Softbank’s influence even further.

Kamlesh Bhatia, a principal research analyst at Gartner, told IDG that investing in start-ups will be important to keep the operators close to the needs of consumers, and to help them innovate as rapidly as web players like Facebook.