ValueFirst Messaging buys Way2Online for Rs 200 crore

 ValueFirst Messaging, an enterprise mobility and communication services company, has acquired Way2Online Interactive that owns way2sms.com and 160by2.com - websites used by millions to send free text messages to any mobile phone in the country.

The websites became prominent when telecoms regulator Trai imposed a rule in September last year that barred users from sending more than 200 text messages a day.

The all-cash deal that industry sources reveal to be close to Rs 200 crore marks the third complete acquisition by the mobile value-added services player since 2009. The deal has been funded through internal accruals and investment from US-based New Enterprise Associates and Headland Asian Ventures Fund (formerly HSBC Private Equity).

With this, the Gurgaon-based company has acquired a customer base of around 37 million unique users, second only to Facebook's 50 million in India.

"We want to become India's largest digital media company. This acquisition completes our set of offerings. It will help our clients to reach out new customers and for us to get bigger deals. We will be able to compete with larger companies out there like Network 18 and Rediff," ValueFirst Group's chief executive officer Kumar Apoorv told ET.

On a marketing level, the websites will remain as independent brands but since both offer practically same services, the back-end will be integrated on to a single platform within ValueFirst. The integration will require around eight to 11 months, during which Raju Vanapala, the owner of Way2Online Interactive, will exit with his team of 50 people based out of Hyderabad.


Apoorv added that a differentiation between both the acquired peer-to-peer message websites would have to be created.

"We have about 500 million contacts saved on their address books, that means, we have more than half of India's mobile subscribers as our registered users. We will devise a strategy to leverage this around sharable content and make it more social," he said.

ValueFirst will hire about 100 people to support functions of the newly-acquired company. It is expecting revenues of around Rs 250 crore this year coming largely from mobile advertising.

The company is also planning an initial public offer of around Rs 4,000 crore either on the local stock exchange or Nasdaq. It has not yet filed the draft red herring prospectus, an application to begin preparation for a public listing.
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