Nimbuzz, one of India’s first indigenous mobile messaging apps, has been acquired by UK-based telecom service provider New Call. The overall value is expected to be around $250 million with New Call taking 70% stake in Nimbuzz for $175 million, a source familiar with the transaction confirmed. Current CEO Vikas Saxena and the team of Nimbuzz are expected to remain with the company.
This is in keeping with New Call’s announcement earlier this year that it has set aside $100 million for acquisitions of telecom companies in India. The company had stated that it planned to make 4 mid-level, strategic acquisitions.
“The Indian National Telecom Policy 2012 has targeted 100 per cent tele-density and 600 million broadband connections by 2020. We are looking at strategic acquisitions to enable New Call Telecom to make strong organic growth in the fast growing Indian telecom market and establish a pan-India presence. We’ve initially allocated US $ 100 million for the purpose and are optimistic of further growth due to the depth of entrepreneurial talent in the telecom services space in India,” said Jerome Booth, Chairman, New Call Telecom, while making this announcement.
Nimbuzz has nearly 200 million users globally with around 30 million in India (according to media reports). The mobile IM space has seen rapid growth over the last couple of years. In India, Chinese heavyweights Tencent have introduced WeChat in India, while others like WhatsApp, Line, Hike and Viber are some of the other popular ones. WhatsApp has around 60 million users in India, which is the single biggest user base for the app in the world. Hike, another Indian messenger, has around 31 million users, nearly 90% of its user base, in India.
Though most of these applications lack a solid revenue model, they have been eating into the revenues of telecom operators by offering OTT services like voice calls and an alternative to SMS. This potential has seen some consolidation in the IM space; the biggest example of which was Facebook’s $19 billion acquisition of WhatsApp.
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Nimbuzz earns revenue through the Chat Buddy app, which is popular with advertisers and other mobile advertising options. Last year it started offering international calling in a partnership with Spectranet that allowed Nimbuzz users in India to call or message outside the Nimbuzz network. A media report said that 30% of total revenues come from international calls while mobile brand advertising contributes to 60% of the revenue.