Word on the street in Mumbai:
i) specifically on the Shrei tie up the word is "why", and "how are they going to get White label (WLA) to pay when no-one else can?" The WLA business is tough. Licences were issued to 17 companies by RBI in 2013, 7 of these companies actually got going and only 2 (Tata & BTI payments) have made any real progress deploying 75% of the white label machines so far. Shrei was issued a licence but until this tie up has not done anything. Main reason WLA has not worked is the financials do not stack up - low fee structure and number of transactions required to make any money just do not add up. It is difficult to find locations for the white label atms that will generate enough transactions.
RBI has tried hard to support WLA recently allowing 100% direct foreign investment. But this issue of low fees and economically viable locations is a key one and difficult to fix.
See link:
http://articles.economictimes.india...las-interchange-fee-national-financial-switch
ii) The economically viable location issue is relevant to the Mphasis deal as well - TSI are forecasting to increase the transaction volumes by, I think 8%. In reality the only way to increase the volume of transactions is to find another location for the ATM. Remember this is a real estate play in many ways and to increase number of transactions you need to increase foot traffic going past a specific location??
iii) Credible financial reporting in India is a challenge - and with private companies even more so. It pays to be skeptical -so the final word on the street in Mumbai is until such time as holders of TSN get a comfortable notion about the financials behind any/all of the TSI deals.......then be skeptical about how viable the deal is. If others have failed to make money in the past - what will TSI be able to do differently?
Hope this feedback is of some use and as usual DYOR .
