Hot on the heels of its $87m acquisition of Hutchison Global Services (HGS) earlier this month (see here), telco-focused offshore IT/BP player Tech Mahindra has now acquired a majority stake in mobile payments developer Comviva Technologies from Indian conglomerate parent Bharti Group.
Tech M is paying Rs2.6bn (£29.6m) to acquire a 51% stake in India-based Comviva, valuing the entire business at Rs5.09bn (£58m). Neither Comviva’s revenue nor profitability were disclosed so it’s difficult to tell if Tech M is getting a good deal. However Tech M is hedging its bets, since just under half is being paid upfront and the remainder will be spread over the next five years if Comviva hits its performance targets. Tech M said that the ‘current promoters’ will continue to hold a 20% stake in the business. We suspect Comviva’s other investors, private equity firm Sequoia Capital and Cisco, will sell their stakes.
The Comviva deal sees Tech M sticking to its knitting in the telco/mobile IT/BP space. Comviva provides a range of mobile applications and services, focused on mobile money and payments, mobile data, integrated messaging, mobile lifestyle and customer life cycle management. Its managed services are focused around its own IP to support mobile operator client’s value added services offerings, such as paid for and premium content. It also offers supply chain services to source, aggregate and on-board content for its customers. It has deployments with 130+ service providers and banks in over 90 countries across Asia, Africa, Middle East, Latin America and Europe. It also has an office in Wokingham, UK, from where it operates in the European market. Apparently it has been present in the UK for 5 years, and has established relationships with operators and channel partners.
With the acquisition of HGS and now Comviva, Tech M is beginning to piece together an end-to-end IT/BP offering specifically targeting the mobile network operator space. The proposition sounds sensible if Tech M can get all the pieces integrated and working together successfully. But convincing mobile operators to hand over more of their seemingly core activities for support and management is always going to be a tough sell.