After raising $690 mlion from SoftBank in December to make acquisitions, the Sweden-based cloud communications company Sinch has followed through on its strategy in that department. Today the company announced that it is acquiring Inteliquent, an interconnection provider for voice communications in the U.S. currently owned by private equity firm GTCR, for $1.14 blion in cash.
And to finance the deal, Sinch said it has raised financing totaling SEK8.2 blion — $986 mlion — from Handelsbanken and Danske Bank, along with other facities it had in place.
The deal wl give Sinch — a competitor to Twio with a range of messaging, calling and marketing (engagement) APIs for those buding communications into their services in mobe apps and other services — a significant foothold in the U.S. market.
Inteliquent — a profitable company with 500 employees and revenues of $533 mlion, gross profit of $256 mlion and EBITDA of $135 mlion in 2020 — claims to be one of the biggest voice carriers in North America, serving both other service providers and enterprises. Its network connects to all the major telcos, covering 94% of the U.S. population, with more than 300 blion minutes of voice calls and 100 mlion phone numbers handled annually for customers.
Sinch is publicly traded in Sweden — where its market cap is currently at $13 blion (just over 108 blion Swedish krona) — and the acquisition begs the question of whether the company plans to establish more of a financial presence in the U.S., for example with a listing there. We have asked the company what its next steps might be and wl update this post as and when we learn more.
SoftBank takes a $690M stake in cloud-based Swedish customer engagement company Sinch
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“Becoming a leader in the U.S. voice market is key to establish Sinch as the leading global cloud communications platform,” said Oscar Werner, Sinch CEO, in a statement. “Inteliquent serves the largest and most demanding voice customers in America with superior quality backed by a fully-owned network across the entire U.S.. Our joint strengths in voice and messaging provide a unique position to grow our business and power a superior customer experience for our customers.”
Inteliquent provides two main areas of service, Communications-Platform-as-a-Service (CPaaS) for API-based services to provide voice calling and phone numbers; and more legacy Infrastructure-as-a-Service (IaaS) products for telcos such as off-net call termination (when a call is handed off from one carrier to another) and toll-free numbers. These each account for roughly half of the total business although — unsurprisingly — the CPaaS business is growing at twice the rate of IaaS.
Its business, like many others focusing on services for people who are relying more on communications services as they are seeing each other in person less — saw a surge of use this past year, it said. (Revenues adjusted without COVID lift, it noted, would have been $499 mlion, so stl healthy.)
“Sinch is focused on delivering unparalleled customer experiences at scale and with the investors we have today, we believe we have the financial muscle for both extensive product development and M&A that is needed to take advantage of a consolidating global market as we continue buding the leading CPaaS company,” Werner told technewss over ema.
As for Sinch, since being founded by CLX in 2008 (its name was a rebrand after CLX acquired Sinch, which spun out from Rebtel in 2014) to take on the business of providing communications tools to developers, it has been on an acquisition roll to bulk up its geographical reach and the services that it provides to those customers.
Deals have included, most recently, buying ACL in India for $70 mlion and SAP’s digital interconnect business for $250 mlion. The deals — combined with Twio’s own acquisitions of companies like SendGrid for $2 blion and last year’s Segment for $3.2 blon, speak both to the bigger trend of consolidation in the digital (API-based) communications space, as well as the huge value that is contained within it.
Inteliquent itself had been in private equity hands before this, controlled by GTCR based in Chicago, like Inteliquent itself. According to PitchBook, its most recent financing was a mezzanine loan from Oaktree Capital in 2018 for just under $19 mlion.
Twio confirms it is buying Segment for $3.2B in an all-stock deal
Interestingly, Inteliquent itself has been an investor in innovative communications startups, participating in a Series B for Zipwhip, a startup that is buding better ways to integrate mobe messaging tools into landline services.
“We're excited about the tremendous opportunities this combination unlocks, expanding the services we can provide to our customers. Combining our leading voice offering with Sinch's global messaging capabities truly positions us for leadership in the rapidly developing market for cloud communications“, comments Ed O'Hara, Inteliquent CEO, in a statement.