Tata Communications has reached a definitive agreement to purchase Kaleyra Inc., a communication platform service provider based in the United States. The acquisition is valued at $100 million and includes the assumption of Kaleyra’s gross debt of $224.9 million and net debt of $149.9 million as of March 31, 2023. The transaction is subject to approval by Kaleyra’s stockholders, regulatory approvals, and customary closing conditions. Once completed, Kaleyra will become a subsidiary of Tata Communications. The acquisition is expected to be finalized within six to nine months, and the 640 employees of Kaleyra across 16 global offices will continue their roles within the company.
In the fiscal year ending on December 31, 2022, Kaleyra recorded a revenue of $339.2 million, indicating a growth of 26.7% compared to the previous year. As a global omnichannel integrated communication services provider, Kaleyra offers various personalized communication solutions through its proprietary platforms, including messaging, video, push notifications, e-mail, voice-based services, and chatbots.
However, Kaleyra’s earnings before interest, taxation, depreciation, and amortization (EBITDA) were negative, amounting to -$15 million. Tata Communications management stated during an investor call that they expect the acquisition to turn EBITDA positive in the near term and achieve double-digit growth in the medium term by driving synergies in infrastructure and purchasing capabilities. They also acknowledged that there might be short-term dilution in Tata Communications’ EBITDA due to the acquisition.
The strategic appeal of the acquisition lies in the growth potential of the enterprise SMS and non-SMS segments, such as CPaaS (Communications Platform as a Service). Tata Communications’ Digo product, launched last year, and Kaleyra’s offerings complement each other geographically, making the acquisition attractive.
