Reliance Communications, on Monday, announced the acquisition of US-based Ethernet services provider — Yipes Holdings for $300 million (Rs 1,200 crore) in an all cash deal.

Briefing reporterse, Chairman Anil Ambani, told reporters, the largest acquisition would enable the company to scale up its optic fibre network besides giving it a footprint in the American market.

Yipes provides high-speed data network access to 1,000 customers in 14 US cities, operates optic fiber network of more than 22,000 kilometers (13,670 miles). The company has operating margin of 55 per cent and is cash positive, Mr Anil Ambani observed. RCom, he said, sees a four to five per cent increase in revenues of Yipes over the next 4-5 years. The acquisition of 100 per cent stake in San Francisco-based firm is being made through its RCom’s affiliate Flag Telecom. Yipes will operate as strategic business unit of Flag, which provides international network transport and data services to telecom operators, content providers and Internet communities across the globe.

Accelerate entry
The Yipes stake was bought from Northwest Venture Partners, JP Morgan Partners LLC, Sprout Group and Crosslink Capital, Mr Ambani said, adding Yipes will accelerate Reliance’s entry into the $90 billion global market for enterprise and institutional data services market. 

Mr Anil Ambani said RCom would spend Rs 1,000 crore to roll out Yipes’ services in India, Asia, Africa, Middle-East and Europe in next one year. Yipes’ customers include Verizon and NTT. Further, Mr Anil Ambani announced that Norwest Venture Partners Managing Partner Pramod Haque would be joining the Yipes’ Board. Stating Yipes is a strategic fit with Reliance Communications, Mr Anil Ambani said it significantly increases Reliance’s revenues from enterprise segment internationally. By synergising Flag and Yipes – given their highly complimentarity in terms of products, services and networks, Mr Ambani said “Reliance is poised to become the global leader in ethernet, a Rs 100,000 crore (US$ 25 billion) market worldwide by 2010.”

According to him, Yipes will operate as a strategic business unit, fully integrated strategically and operationally within Flag Telecom.