As part of the deal, Tech Mahindra will pay Rs. 125 Crores (US$ 23 Million) upfront & the remaining will be paid over 5 years depending on achievement of mutually agreed performance milestones. Comviva was earlier held jointly by Bharti (50%), from the Bharti Airtel Group, Sequoia (30%) & Cisco (5%). The balance 15% was held by the employees of the firm. Post acquisition, the new entity ‘Mahindra Comviva’ will have Bharti holding onto 20%, Tech Mahindra (51%) & the remaining will be held by by private equity investors and employees.
Why has a software company taken such a strategic decision?
Mobile Value Added Services (M-VAS) is a very lucrative field. With the mobile population booming, companies stand to make handsome profits via this activity. Additionally, Tech Mahindra has ample experience in developing software, but lacked a strong foothold in the mobile business. Comviva can offer that support not only in India, but abroad too. Additionally, the company already offers its services to almost all the leading telecom players like Vodafone, Idea, NTT Docomo, Aircel & even electronics & smartphone manufacturer Samsung relies on its inputs. With such illustrious client list, Tech Mahindra seems to have made a very wise long-term business decision which might start giving immediate returns from this fiscal year itself.
With the acquisition, Tech Mahindra also hopes to achieve two more goals revealed a statement from the company, “It dovetails into two of our stated strategies, namely investing in emerging areas such as network, mobility, analytics, cloud and security and further focus on non-linear growth”. On the other hand Comviva will surely gain from the vast experience Tech Mahindra has in the software development sphere said Rakesh Bharti Mittal, Chairman of Comviva, “Tech Mahindra, with its deep domain expertise in IT and telecom technologies, is an ideal partner to guide the future growth story of Comviva”
Lets see what new innovations these two tech giants conjure up.
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