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To operate as Flag Telecom’s unit

Paul Noronha

Going global: Mr Anil Ambani, Chairman, Reliance Communications, and Mr John Scanlon, CEO, Yipes Holdings Inc, at a press conference in Mumbai on Monday.

Our Bureau

Mumbai, July 16

The Anil Ambani-controlled Reliance Communication said on Monday that it has agreed to acquire the US-based Yipes Holding Inc in an all-cash deal for $300 million (Rs 1,200 crore).

Yipes, which provides high-speed data network access to 1,000 customers in 14 US metros, operates an optical fibre network of more than 22,000 m.

The 100 per cent stake was brought from Norwest Venture Partners, JP Morgan Partners LLC, the Sprout Group and Crosslink Capital. Reliance Communication made the acquisition through its wholly owned subsidiary Flag Telecom.

Announcing the deal, Mr Anil Ambani, Chairman, Reliance Communication, said Yipes will accelerate Reliance Communications penetration into the $100-billion global enterprises data market.

“We will double Yipes reach in metro cities in the US. We intend to take the Yipes franchisee model into 20 new geographies, particularly India, the Middle-East and Asia, by 2009,” said Mr Ambani.

Yipes will operate as a strategic business unit of Flag Telecom. Reliance will be financing the transaction through internal accruals.

Yipes, strongly positioned in Ethernet, is approaching $100 million in revenues by 2008 and going forward, there will see a 50 per cent CAGR growth as it leverages Flag’s existing assets, said Mr John Scanlon, CEO, Yipes.

According to a research report, the Ethernet services market is growing at a CAGR of over 30 per cent and is expected to touch $25 billion by 2010.

The Reliance Communication scrip hit an intra-day high of Rs 577.4, before settling at Rs 574.05, 3.49 per cent higher than the previous close.

More Stories on : Broadband | Mergers & Acquisitions | Reliance Communications Ltd | Overseas Investments

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