labels: M&A
Hyderabad mobile payment firm Tanla acquires Finland's Openbit news
05 June 2008

Hyderabad: Hyderabad-based telecom and mobile payment software provider Tanla Solutions today said it had acquired an 85-percent stake in Finland's Openbit OY, integrator of global on-device payment and digital rights management (DRM) for mobile applications, in an all-cash deal for $15.81 million, in a deal that values the Finnish firm at $18.60 million.

Tanla is acquiring the 85 per cent  from the outgoing financial investors and the remaining 15 per cent  held by the management will be purchased by Tanla in two tranches of 5 per cent  and 10 per cent  after the first and second year respectively. For the Financial year ended 31 December 2007, Openbit recorded revenues of $15.88 million with an EBITDA of $0.79 million. Openbit had cash equivalents of $3.04 million as of 31 December 2007.

''Smart phones are claiming an increasing share of the handset market driving the consumption of richer content formats and increased use of the mobile phone for processing payments," said Uday Reddy, chairmana and managing director, Tanla Solutions Ltd. "The acquisition of Openbit extends Tanla's payments portfolio beyond operator billing products to address the emerging market for rich media and business applications on handsets.''

Tanla has identified mobile payments as one it's core verticals. Juniper Research estimates the market opportunity to be in excess of $11 billion by 2011 a third of which would be on account of retail and ticketing segments. The drivers for this growth are attributed to convenience and increasing use of feature rich phones. Industry estimates for feature and Smartphone shipments by 2011 exceed 870 million registering far higher CAGR as compared with voicephones. More than 1 billion subscribers would be using their mobiles for the purchase of both physical and digital goods globally over the next three years.

''Our relationship with Tanla will significantly expand the current business by providing competent resources for software development and quality assurance to enable Openbit access more markets and customer accounts, and to implement new mobile platform features as needed by Openbit's key customers,'' said Arto Lehtonen, CEO, Openbit, who spent 13 years with Nokia and was responsible for its roadmap for smart phones and wireless datat products.

Openbit's clients include Nokia and some of the largest independent software vendors like Symantec, F-Secure & Quickoffice and Gaming companies like 3D Arts and Gamelion.

The acquisition would enable the Indian firm to expand its overseas footprint in keeping with its vision to become a global end to end applications and solutions provider and would get a strong footing in market with access to proprietary technology and applications as Openbit has a strong original equipment vendor status with leading mobile phone manufacturers globally. Tanla already has offices in  offices in London, New York, Dubai, Singapore, Dublin and Colombo.

Tanla says it would also be integrating its global aggregator platforms with the acquired company to enable end users to be billed by Premium SMS and also help leverage more than 90 operator relationships to facilitate its objective of global connectivity. Both companies would integrate their respective R&D and Product Development capabilities to introduce new products and services globally pooling on the resources available with Tanla's development centre for professional services including offshore development.

The Finnish firm has an installed base of over 20 million Symbian OS-enabled Nokia handsets worldwide. It provides software vendors and content distributors with secure distribution and process payment of mobile content for end-users globally and has established global billing agreements that allow convenient payment of mobile content with nearly 90 operator networks in over 30 countries and with all major credit cards worldwide. 

"We hope to integrate our operations at the earliest to benefit from the tremendous synergies available to us,'' Reddy added.

KPMG and Grant Thornton represented Tanla.


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Hyderabad mobile payment firm Tanla acquires Finland's Openbit