Essar Group- through its handset retailer The Mobile Store Ltd is rumored to have plans to buy the promoter's stake in Future Axiom Telecom Limited which will be merged with The Mobile Store.

Pantaloon Retail India Ltd and Axiom Telecom LLC will sell their stake to Essar in exchange for a minority stake in the combined entity.

The deal is likely to be completed by the end of this month. Post acquisition, the Essar Group management will gain operational control of the combined entity.

Transaction Reference: ET

Future Axiom Telecom Limited was formed in 2007 as a JV between the Future Group and Axiom Telecom LLC- a UAE based distributor, retailer and after sales support provider of  mobile phones, phone accessories, wireless gadgets, memory & storage devices.

The company launched its operations in October 2008 under the brand 'One Mobile'. It has around 340 stores across India including 290 ‘shop-in-shops’ located inside the Food Bazaar and Big Bazaar outlets of the Future group.

Consolidation seen in the Indian mobile handet retail space:

According to IDC data, about 100mn phones were sold in the country in the 12 months to June 2009 recording a growth of 6.7%. The value of the Indian mobile handset market is about Rs 30,000cr with most handsets being sold in the unorganized market.

Mobile retail stores are facing competition from unorganized players who are present in large numbers in a single area.  The margins in the industry are also very low (not more than 5-10%).

India has around 440mn mobile subscribers, with adding around 10mn a month on average.

More than one half of the market is in the hands of Nokia Priority dealers appointed by Nokia.

Essar | The Mobile Store | Future Axiom | Axiom Telecom