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Warburg picks up Cibernet stake for $200 m

A Warburg Pincus group company has acquired Cibernet, one of the world’s most experienced clearing and roaming business service provider for telecom companies across globe and with a sizeable presence in India, for over $200 million.

The move is said to have proved to be a windfall for iLabs, a private equity firm operating out of Hyderabad and Chennai, which was an anchor investor with the Cellular Telecommunications and Internet Association in Cibernet from 2001.

“With increased focus on the Indian market, Warburg Pincus is expected to further leverage synergies from India, consequently growing the operations here,” sources privy to the development told ET.

Cibernet’s operations are spread over the US, UK and India. In fact, iLabs, promoted by Srini Raju and Sandeep Reddy in 2000, was a substantial investor in Cibernet. It also turned out to be one of iLabs’ earliest investments.

When contacted, a spokesperson of iLabs Group confirmed the development, but declined to reveal the initial investment as also the equity stake held in Cibernet. “We were a substantial investor. However, we are unable to reveal the equity stake, since we are bound by the confidentiality clause,” she added.

Industry sources pointed out that iLabs normally invests around $10-20 million in each of the ventures it identifies. At the same time, this investment range need not be a benchmark for all of iLabs investments, they added.

Cibernet provides services to over 300 wireless operators across the globe. It offers financial settlement of voice, data, and m-commerce transactions, enabling mobile operators to focus more on their core operations. It provides clients with inter-company billing protocols, roaming administration tools and financial settlement programs.

In India too, Cibernet is the dominant wireless roaming and clearing house for operators like Bharti Airtel and commands a market share of about 70%. Though headquartered in Bethesda, Maryland, its back office is located in Hyderabad, where 150 of its nearly 220 global employees work.

This transaction (Warburg Pincus group company picking up Cibernet) furthers the consolidation in the sector with the merger of the top three clearing houses that include MACH, Dannet and Cibernet, in the wireless space over the last few quarters. It is to be seen how this impacts the drive of regulators world-wide to control and reduce roaming charges for consumers, industry sources said.

Source : Economic Times

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