Reliance Industries Ltd has entered into an agreement to acquire US-based open telecom solutions provider Radisys Corporation at a valuation of $74 million. As part of the deal, which is widely expected to boost Reliance Jio Infocomm Limited (Jio’s) 5G and Internet of Things (IoT) capabilities, RIL will pay $1.72 per share in cash for the buyout, a joint release from the two companies said.
Headquartered in Hillsboro, Oregon, the Nasdaq-listed Radisys has nearly 600 employees, an engineering team in Bengaluru, along with sales and support offices globally. In a statement to the press, RIL said, Radisys enables service providers and telecom equipment vendors to migrate to next-generation networks.
The deal is subject to statutory closing conditions, including regulatory approvals and approval of Radisys’ shareholders, and is expected to close in the fourth quarter of 2018. RIL intends to finance the transaction through its own internal accruals, the statement added.
Push for IoT
According to consultancy firm Deloitte, the IoT units in India are expected to see a growth of 31 times to reach 1.9 billion in 2020 from its current base of 0.06 billion. In terms of revenue, this opportunity could represent $9 billion by 2020 from $1.3 billion in 2016 — a growth of 700%. The government of India aims to create a $15 billion IoT industry in India by 2020, a report by the Economic Times said.
As such, acquiring Radisys is seen as an effort to help Jio build in-house development capabilities for fifth-generation (5G) technology and IoT to compete against its bitter rivals in the Indian markets. Bharti Airtel is in advanced talks with US telecom major Verizon for a broad partnership around IoT and is establishing a new centre in Bengaluru to work on these technologies.
On the other hand, Vodafone, which is in the process of merging operations with Idea Cellular, has tipped IoT to be one of its fastest-growing segments and will bring some global IoT use cases to India, besides launching a narrowband IoT network, similar to the one launched by Jio.
However, RIL, which has invested around Rs 2,50,000 crore in its telecom business so far, appears to be the most aggressive of the telcos in India, having already set up a narrowband IoT network which is commercially active in a few cities, including Mumbai.
Moreover, Jio is also set to buy spectrum, fibre, towers and switching nodes from Reliance Communications for over Rs 17,000 crore which will significantly boost its coverage. Aside from it, a report by Livemint also shows that the company is investing money and resources in equal measure into upcoming technologies.