HTC may consider buying Nokia 's Chennai facility

HTC may consider buying Nokia's Chennai
plant if it is put up for sale to a third party other than
Microsoft, as the Taiwanese smartphone maker
explores ways to reach the Indian consumer in a better
and faster way amid stiff competition, a top official
said.
"I am happy to look into it, because the overall
preparation, exploration hinges upon if it will serve
consumers better. If that (plant) will do that (service
consumers better), then we would be happy to look
further into it," Chialin Chang, HTC Chief Financial
Officer, told ET.
He however clarified that he wasn't aware of the
current situation surrounding Nokia's handset
manufacturing plant.
The question of a sale to a third party other than
Microsoft has arisen as it is becoming increasingly
clearer that Nokia won't be able to resolve the tax
disputes with Indian authorities before the scheduled
April end close of the $7.2 billion global deal. The
deal, announced last September, entails Nokia selling
its devices business, among other parts, to Microsoft.
But the tax authorities attached the factory soon after
the global deal was announced, saying the Finnish
handset maker had unpaid taxes. In addition, Tamil
Nadu slapped another tax notice on the company. Both
the matters are in court.
Microsoft and Nokia haven't yet revealed their future
course of action but time is running out for Nokia to
resolve the dispute.
People familiar with the matter have said the recent
voluntary retirement scheme offered to employees at
the Chennai plant indicates that Nokia is preparing to
scale down operations, trying to conserve as much
cash as possible as it seeks to sort out the dispute
and eventually transfer the unit to Microsoft.
A person in the know of the matter however said as a
factory, the Chennai plant may be fast losing its
importance to Microsoft, given the ongoing tax issues.
"It makes no sense for Microsoft to keep the factory as
they can easily outsource the entire production to
China, just like Apple does, and successfully at that",
the person said. As it is, Nokia has reportedly shifted
much of the production of its popular Asha series
featurephones to Vietnam.
This could further open up the possibility of Nokia
closing down the plant all together or sell the plant to
a third party, bringing into the picture handset makers
like HTC which are betting on India's fast growing
smartphone market for global growth.
"India is a very crucial market for HTC. We want to go
deeper into tier 1 cities, expand beyond tier 1 cities,"
said Chang.
He said that the company is likely to launch some
more smartphones at different price points in early
June. HTC will also launch wearable devices and
tablets in the second half of 2014.
Chang said that the company intends to use the
franchisee model to expand its retail presence, apart
from online sales, adding that HTC plans to improve
its communication with consumers and be "more direct
and bold".
He however said that HTC isn't ready yet to drop its
entry level price points further than the Rs 8,700 priced
smartphone it launched recently.
"We constantly explore that at certain price tier, are we
able to offer a differentiation. If we are not, purely on
price and hardware parameters, we will not participate.
Currently we are not there yet, but we will continue to
explore," he said.