Subex acquisition to boost performance

Software company Subex Azure���s telecom industry vertical will get a boost from the acquisition of Syndesis. The fulfilment and assurance segment in the telecom space, in which Syndesis operates, is a $2-billion market that is expected to double in three years. Subex is paying $164 million to acquire the company in a cash deal, allowing it to offer integrated solutions to customers. Subex Azure���s existing business provides solutions to telecom service providers for fraud management and revenue maximisation.

It commands a 29% market share of $216 million global market pie for these services. Syndesis focuses on enabling telecom companies to migrate to newer technology platforms including IP based services portfolio. Its services ensure fast and cost efficient market access for these services.

Both the companies have six customers in common, suggesting that the post-takeover entity will enjoy operational synergies. It can also cross sell the combined customer base. That will give the company an edge in the global telecom business.

Subex Azure���s growth has been rapid in the past few years. In HY07 its total income rose by 30% to Rs 108.5 crore. Though more details about the profitability of Syndesis are not available, it is a zero debt company with profit margins in high single digits.

The price paid by Subex Azure to acquire Syndesis is about 3.7 times the trailing twelve month revenues of the latter. That is in line with the price to sales valuations seen for recent acquisitions in the IT sector.