India is a complex and often misunderstood market.
It has the second-largest population in the world, beaten only by China in terms of sheer numbers. Because of this, it was presented as a market with a great potential when it opened up to international trade in 1991.
Yet few American companies capitalized on this initial gold rush.
The problem, we now know, was that the size of India’s middle class was grossly overestimated. In truth, the wealth gap there is abysmal.
But since 2008, there’s been a renewed push for big businesses in India, with special focus on the tech and communications sectors. The nuances of the country’s economy are being addressed.
Today, we’re going to consider a microcap stock in the communications industry in India.
The State of Consumer Tech
India’s 2011 census revealed that only 4.6% of the population owned all four of the following: TV, computer, car/scooter, and telephone or mobile phone.
According to that census, only 9.5% of the population owned a computer, while 21% owned a car or scooter and 63% owned a phone.
Based upon 2014 figures, approximately 28% of India’s population owned a mobile phone.
While that’s low penetration in terms of population percentage, it still puts India far ahead of the United States in terms of sheer numbers.
In other words, India has about three times the number of active mobile connections as the U.S., and it isn’t even close to complete penetration. It is the third-largest market in the world in smartphone shipments, and it’s the only one of the top three with a huge amount of room to grow.
Because of this, telecom and e-commerce have attracted a lot of international attention:
- In 2014, Japanese telecommunications company SoftBank pledged a $10 billion investment into India’s IT and communications sector. (Today, SoftBank pledged a further $10 billion into solar power development in India, but I’ll be talking about that in another article.)
- China’s Alibaba (NYSE: BABA) took a $500 million stake of Indian online payment platform One97 Communications last February and is in talks to do the same with India’s Snapdeal.com.
- Samsung, the world’s largest supplier of smartphones, was actually unseated in February 2015 when a local Indian company called Micromax grabbed a larger share of the market than the Korean company. Meanwhile, third- and fourth-place smartphone makers in India are also local: Karbonn and Lava.
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The Microcap
Today, 5BARz International (OTCQB: BARZ) received verification on the OTC Venture Marketplace. The company makes a small plug-and-play device that boosts cellular signals inside buildings and in crowded urban areas without creating signal interference.
5BARz claims its booster can improve indoor cell signals by as much as 70 db without “parasitic feedback” between its send and receive antennas.
These signal extenders are a more generalized solution than carrier-issued femtocells, which are essentially tiny cellular towers owned by network providers and leased to end users to improve signals inside of buildings or in weak coverage areas.
Just one month ago, the San Diego-based company launched its products in India for the first time.
5BARz CEO Daniel Bland said, “This product launch into the market in India, comprised of some 900 million subscribers, represents the culmination of seven years of research and development of our… cellular network extender.”
Last November, the company raised $3.45 million in a private stock placement to build enough of its product for the launch. In March, it hired former managing director of Kyocera Wireless India as the chief executive and managing director of 5BARz India and licensed manufacturing out to Flextronics (NASDAQ: FLEX).
It’s a big launch for the small company, and one worth looking at considering the poor service generally available to Indian mobile phone users.
Indeed, last December, BBC technology correspondent Prasanto Roy wrote a scathing piece entitled, “Why India’s Mobile Network is Broken.”
The article said Indian mobile phone users have to deal with poor connectivity, busy networks, dropped calls, no Internet service, and poor signals every single day.
“A weak mobile signal is common in urban India’s high-rise office and residential areas. The upscale condominium complex in Gurgaon where this writer lives has virtually no mobile service,” Roy wrote.
It is this last complaint that 5BARz hopes to address with its product.
With a cheap product that can boost connectivity, it offers a solution to a common problem.
Good Investing,
Tim Conneally
For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.
