HTC Corp rejected today a report that the Taiwanese smartphone maker was considering buying rival Nokia Oyj’s factory in Chennai to give it better and faster access to the Indian market. An HTC spokesperson said, “HTC would like to clarify that the company has no intention of purchasing the plant. From a business perspective, we continually review opportunities to strategically invest and we will continue to do so in the future. It’s unfortunate that Mr Chang’s comments were taken out of context during the interview.”
In a story published Monday, The Economic Times had quoted HTC Chief Financial Officer Chang Chia-lin as saying that the company “would be happy to look further” into buying the Nokia facility if it were available for sale to a third party other than Microsoft Corp.
It has been reported by The Financial Express that Nokia India’s Chennai manufacturing plant will become a contract manufacturer for Microsoft. The global acquisition of Nokia by Microsoft will conclude on April 25 and the Chennai unit has now decided to enter into a services agreement with the new owner to supply handsets from its factory, at least for a period of one year under a contract manufacturing system.
“The situation is a complicated one and Nokia is continuing to weigh its options. As there is still time before the closing of the deal, we cannot speculate on possible outcomes at this point. With Chennai, it is worth remembering that we have said we will consider a services agreement with Microsoft should our Indian assets not be able to transfer at the close of the global deal,” said a spokesperson of Nokia.
“With only two days before concluding its deal with Microsoft, it is highly impossible for Nokia India to settle all its tax disputes as well secure regulatory approvals to enable Chennai factory becoming part of Microsoft. Hence, Nokia India as said in December last that Chennai plant can become a contract manufacturer for Microsoft for one year,” the spokesperson said.
Nokia had on Monday announced that it expected the transaction to close on April 25. It said it would sell substantially all of its devices & services business to Microsoft. The deal, originally announced on September 3, 2013, is now subject only to certain customary closing conditions.
The possibility of selling the plant to a third party has arisen because Nokia may not be able to resolve a tax dispute with Indian authorities before the expected closing of the sale of its global phone business to Microsoft at the end of April.
Nokia has to decide on the factory’s future before it concludes the Microsoft deal, and if the tax dispute cannot be resolved, Nokia might be forced to close the plant or sell it for cash to other handset makers like HTC.
The Nokia deal is said to be worth 5.44 billion euros (US$7.2 billion).
HTC denied the report, however, saying Chang was misquoted.
“We wish to clarify that this statement is untrue and was misquoted,” the Taoyuan-based company said.
“What was shared was that HTC is a company that will continue to invest in positive business opportunities but (it) was not referring to this particular company or any other company at the time.”
The report came on the same day that HTC launched three smartphones for the Indian market that range from entry-level to high-end models in a move to boost sales in the second quarter.
One of the new phones is the entry-level Desire 210, the company’s first foray into the sub-10,000 rupee phone market in India. It will compete with the likes of the Nokia Lumia 520 and Samsung Galaxy S Duos, HTC India Country Head Faisal Siddiqui said.
HTC hopes the introduction of the new products will increase its market share in India to 10% from the current 4%-6%, Siddiqui said, without specifying a timetable for reaching that goal.