n-logue: A Great India Bet

India is a complex market, but in rural India, the complexity escalates significantly. And yet, imagine the power that a company would command having cracked the rural India communication / information market?

n-Logue is a contender for such power.

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n-Logue’s business model has been inspired by the success of long distance Public Call Offices (PCO) model and the Cable TV Operator model in India. The 950,000 PCOs, which are roadside booths offering telephony services, account for about 25% of the total fixed line telephony income in India. The success of these ventures proved that demand aggregation, a basket of services approach and local entrepreneurship could combine to make a rural internet cum telephony kiosk operationally viable. These principles are the foundations of n-Logue’s approach.

n-Logue leverages local entrepreneurship and resources at two levels: the taluk level (county) and the village level. At the taluk level, n-Logue partners with a local service provider (LSP), who co-invests in an Access Center (The switch and base station infrastructure of the corDECT system, which can provide last mile wireless connectivity to 1000 independent subscribers, and that can provide about 500-1000 internet/telephone connections). Each LSP provides internet connections to subscribers over an area of 3000 sq. km (radius of 30 km). On an average, the coverage would include 2-5 small towns and about 400 villages. The LSP, typically a local entrepreneur, is a project partner to n-Logue and shares the risks (investment) and rewards of the project.

At the village level, the LSP enrolls rural entrepreneurs to become kiosk operators, who provide telephone, internet and a host of other services to the end customers the village population. Each kiosk operator invests about Rs. 50,000 ($1,000) in kiosk infrastructure, which includes a corDECT subscriber terminal, Pentium/Celeron PC with a color monitor and multi-media, a digital camera, power back-up, local language software, relevant applications and a printer.

n-Logue’s investment requirements are modular i.e. the investment model comprises of a series of access centers each of which can exist independently and become viable. The total investment per access center is about Rs. 4.5 m ($100K) which includes corDECT hardware, software, base station and repeater towers and also implementation and service launch related expenditure. The investment is phased out over 2 years and is shared by the LSP partner.

In this model, n-Logue breaks even once about 7000 kiosk operators are fully functional, which could be easily achieved with about 50 to 75 LSP projects. Each LSP breaks even once it has about 150 kiosks or connections, each contributing revenues of Rs. 750 – 1000 per month ($15-20 p.m.). The kiosk operator breaks even at about Rs. 3500 per month ($78).

Achievements are as follows:

• n-Logue has completed 31 projects by March 2005.
• A total of over 1500 kiosks have been set up. This is led by an increasing ramp up of projects to 40 planned by Nov 2005.
• Presently over 30% of kiosks already earning over Rs 3500/($78) per month. The highest monthly earnings recorded was Rs 20,000/($450) in a month in Jan05 at a kiosk in Tamil Nadu.
• Over 70% kiosks are heading towards break even in a 6-9 month period of going live.

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n-Logue’s intent is to provide internet and telecom access to reach 700 M people, which include 350 M untouched by telephony, and the company has been incubated at the TeNet Group at IIT Madras.

The company is raising money. If you want to see the Prospectus, please email me.