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Sify acquires Netkracker's dial-up subscribers

Bipin Chandran & K Giriprakash

India's largest Internet service provider, Satyam Infoway, has taken over the dial-up subscribers of Netkracker, the ISP promoted by Wipro, for an undisclosed amount.

This is the second major customer acquisition in the country's ISP segment, the first being Delhi-based NOW acquiring the customers of BPL Net.

"We have acquired the retail (dial-up) ISP customers of Netkracker," R Ramaraj, chief executive of Satyam Infoway, said. The move is part of the firm's strategy to expand its consumer base.

A Wipro spokesperson, while confirming the deal, said all customers transferred to Sify would now be serviced by Sify. "All customers of Netkracker have been transferred to the network of Sify. All the conditions will now be honoured by Sify," he said.

Netkracker was part of Wipro Fluid Power and had a retail base of around 112,000 subscribers. It incurred accumulated losses of around Rs 370 million.

This acquisition will strengthen the position of Sify, already leading with around 6 lakh customers. It is also expected to help the firm get better valuation because Sify's parent company, Satyam Computer, is contemplating a full or partial exit from Sify.

The deal comes after Wipro decided in March this year to spin off certain divisions of Wipro Ltd into separate subsidiaries in order to rope in strategic investors. One of these was the decision to combine its fluid power business with its loss-making ISP business to form a subsidiary.

Wipro, which had 79 per cent equity in Netkracker, decided to acquire the rest of the stake from the ICICI group, which held 21 per cent, for Rs 30 million.

Netkracker has informed its subscribers that, "Current market dynamics are not conducive for profitable expansion in our points of presence. We have, therefore, entered into an agreement with Satyam Infoway Ltd, the leading ISP in India, to move our existing customers and those registering in future to Sify. This migration will provide you with expanded points of presence in 53 cities, while continuing to provide the quality of service that you were accustomed to from Netkracker."

According to George Zacharia, president of Satyam Infoway, "We have acquired some part of the customer base. This will be an ongoing process that started recently. Over some time, we will acquire a substantial part of Netcracker's dial-up customers." Netkracker, a category-A ISP, is estimated to have over 100,000 customers in India.

"We are in a position to offer the customers of Netkracker additional and expanded services, considering their current operation was not in a position do so," Zacharia said.

On asked about the size of the deal, he said: "We have entered into certain agreements with Netkracker which prevents us from revealing the size and nature of the deal."

The consumers who have been acquired by Sify need to be migrated by June 10. "Registration with Sify is to be completed by June 10, 2002," Netkracker has told its customers.

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