Reliance Communications Close To Acquire Global Virtual Network Operator Vanco

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NEW DELHI: Anil Ambani Group company Reliance Communications is likely to emerge a front runner to acquire UK-based Global Virtual Network Operator Vanco, a move that would bring under Indian company's fold a virtual network in various parts of the world.

According to sources in the know, the negotiations are in the last stage and the deal could be closed by the end of this week.

Although the final price of the deal is not known, at its peak the market cap of Vanco stood at 800 million dollars.

Virtual network operators are companies which lease infrastructure and bandwith from others but provide and manage the communication needs of their clients.

According to sources, 12 international players are in the fray including AT&T, BT, T-System, NTT and private equity firms like Platinium and Oakley.

Vanco has over 750 million dollars worth long-term contracts from its customers.

Reliance Communication is offering CDMA and GSM services in India and is the only player who has been offering the services on both platforms.

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RCom arm buys UK’s Vanco Group for $77 m

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The combination of Reliance Globalcom and Vanco would create a new breed of integrated services communications powerhouse. – Mr Anil Ambani

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Reliance Globalcom, a subsidiary of Reliance Communications (RCom), has acquired London-based managed network services provider, Vanco Group, for about $77 million (Rs 324 crore).

The acquisition of Vanco would add $365 million (Rs 1,550 crore) to the annual revenues of Reliance Globalcom through secure long-term contracts with large enterprise customers, RCom informed the stock exchanges in a statement issued on Monday.

Vanco is considered to be amongst the world’s top five managed global network players with over 220 multinational customers, according to research firm Gartner Inc. Vanco managed network services are available in over 40,000 locations across 163 countries with 90 per cent of its revenue from developed markets of the UK, the US, France and Germany.

The Vanco acquisition will increase Reliance Globalcom’s tally of enterprise customers to over 1,400, the company statement said.

“The combination of Reliance Globalcom’s extensive capabilities and Vanco’s unique global experience would create a new breed of integrated services communications powerhouse,” Mr Anil Ambani, Chairman, Reliance Communications, said.

The acquisition will also enable Reliance Globalcom to add nine more network management centres to its global service systems and leverage Vanco’s relationships with over 700 telecom carriers across the globe.

Reliance has been on the lookout for inorganic growth opportunities. Last month, the company acquired eWave World, a 4G operator focused on emerging markets across Asia, Latin America, Western Europe and Africa.

Courtesy : Business Line

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Vanco may outsource to India post buyout

NEW DELHI: Reliance Communications’ recent acquisition of the ailing UK-based global managed network services provider Vanco for $77 million faces several challenges like improving goodwill lost during Vanco’s past difficulties and sorting out operational and cultural differences, analyst firm Gartner said in a report released this week.

Vanco may also outsource customer-support to India post its buyout by RCom. “Vanco customers in Europe in particular have faced uncertainty regarding continued services and mounting service quality issues. The company needs to convince customers that it can restore service levels. The buyout could potentially lead to the “offshoring” of some services. But Vanco must proceed cautiously as front-office offshoring often meets with customer resistance,” Scott Morrison, research analyst with Gartner said in the report.

But Gartner also added that the buyout of Vanco by RCom bodes well for the company. Infusion of fresh capital and RCom’s backing in several countries may enable the troubled entity to stabilize its current customer base and pursue larger opportunities, it added. The managed services company was bought RCom last week. Vanco’s customer base includes the likes of AVIS, British Airways, Siemens, Virgin Megastores.

The company employs about 750 people and had revenues of over £231 million in 2005 which fell to £104 million in 2006. The company also saw a straight decline in its stock since May last year. The company was also carrying a huge debt on its balance sheet.

As in its earlier acquisitions of Flag, Yipes and eWave World, RCom is expected to retain the management of Vanco, which Gartner says will prove conducive to the acquired entity. However, Gartner adds in its analysis that RCom will have to struggle with the depreciated goodwill of the British virtual network operator (VNO) Vanco. The company had recently faced financial difficulties, which affected its capacity to provide service significantly. RCom now has a presence in US, Asia, Latin America, Western Europe and African continents through its recent acquisitions.