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BL Research Bureau

Tanla Solutions’ acquisition of Openbit gives it a clear edge in terms of enhancing its offering in the on-device mobile payment segment. It could also help Tanla expand operations in newer geographies and create a sustainable revenue stream.

Tanla has acquired an 85 per cent stake, to be hiked to 100 per cent in two years, for $15.8 million. Openbit has revenues of $15.8 million and EBITDA of $0.7 million as of December 2007.

The acquisition holds several positives for Tanla. Openbit has strong tie-ups with players such a Nokia and has its software products installed in 20 million Nokia phones. This deal can help Openbit extend its relationship with Nokia in countries such as China and India, where mobile subscribers are being added on a monthly run-rate of 8 million.

This apart, on-device payment is a concept fast catching up in India with several operators such as Reliance Communications and Bharti Airtel betting big on mobile commerce. Tanla is set to serve Indian operators with agreements on the anvil with several players.

Openbit’s products may augment Tanla’s mobile applications offering in this regard. Openbit derives 60 per cent of its revenues from clients in Europe and 35 per cent from those in Asia-Pacific, both of which are high-growth geographies for mobile payments.

While a bulk of revenues would continue to come from revenue share on usage basis for features such as gaming and other entertainment related downloads, Tanla could create a more sustainable revenue stream over the next couple of years, comprising set-up, upgrade and support revenues.

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