Update: So OnMobile issued a press release to the BSE just an hour or so after refusing to confirm the development to us. They’re holding a con-call tomorrow on this acquisition, and we’ll try and get details from that. According to the press release, OnMobile has acquired 3G video technology and mobile solutions developed over eight years by Dilithium, and the acquisition includes technology covering over 175 patents. The feedback from industry execs is that Dilithium is an excellent technology acquisition for OnMobile, but time for closing 3G service deals with telecom operators appears to be running out.

OnMobile intends to offer video calls, video RBT, multi-screen video streaming on demand, IVVR, video optimization. And like we mentioned below, they intend to change business model. Dilithium’s CTO and co-founder, Marwan Jabri will head OnMobile’s new Video Business Unit, reporting into Sanjay Uppal, President and COO.

Earlier today: MediaNama has learnt from multiple industry sources that OnMobile Global, India’s largest value added services company, is in late stages of discussions to acquire Dilithium Networks, a struggling mobile video solutions company. OnMobile Global CEO Arvind Rao declined to confirm or deny the development, offering only “no comment”. We’ve contacted Marwan Jabri, acting CEO of Dilithium Networks, for a confirmation or denial. Our sources say that the deal is going  to be announced within the next couple of days.

The acquisition will give OnMobile much needed video capability, given the impending launch of 3G services in India. Dilithium is a technology infrastructure company for delivering video on optimised for mobiles: mobile VAS companies like OnMobile build video apps and services on top of the underlying Dilithium platform.

The terms of the deal are not known, but Dilithium has been bleeding, and was undergoing deep restructuring due to delayed payments and cashflow issues. Dilithium has an R&D centre is in Noida, India, and there had been reports of significant layoffs there. The company was seeking a new business model, planning to sell assets and close global offices. Apart from India, Dilithium had offices in Singapore and the United Kingdom and sales offices in China, France, Italy, Portugal and Dubai.

Dilithium customers, according to its website, include BSNL (for deployment of new mobile video & streaming services over 2G and 3G networks, for video streaming, live TV and 2-way video calling), Yahoo, China Mobile, Chungwa Telecom (Taiwan), D2see (UK), Echovox Group (France), Vodafone (6 operations), VTM (Belgium), HTC, TechFaith, Spreadtrum, Datang and Qualcomm. Remember that OnMobile has a global deals with Vodafone and Telefonica, and Dilithium’s video technology would be a good fit for the company that has otherwise mostly been about CRBT. This would be the second real technology acquisition the OnMobile has made; the first being voice recognition software company Telisma. OnMobile also acquired VoxMobili and ITFinity in the past, but then…

According to industry sources we spoke to, once the deal goes through, it will be key for OnMobile to move Dilithium from a licensing model (which limits scale) to a revenue sharing model that has defined the Indian market. This will allow customers low entry barriers, and incremental revenues as business grows. It will also be key for OnMobile to inherit the core development team, one industry exec said.

Related:
– Deep Restructuring At Dilithium, As It Shuts India Ops