Route Mobile merges with Proximus Group: Win-win for both giants?

Route Mobile, one of India's leading CPaaS (cloud communications platform as a service) companies, was recently acquired by Proximus Group, a prominent Belgian network and communication services provider. This deal is expected to reap rewards for both Route Mobile and Proximus Group.

Route Mobile can foray into the US

Presently, Route Mobile has a significant presence across developing markets in Africa, Asia-Pacific, Europe, the Middle East and North America. While it had previously attempted to tap into the US market, the company failed due to intense competition.

Now, through Proximus's subsidiary Telesign, Route Mobile can easily make inroads. Route will have access to digital identity technology and Telesign's broad customer base in the US, which should help the former achieve its target revenue of $1 billion (Rs 8,350 crore), set for FY28, faster.

What's more, Telesign also stands to benefit from Route Mobile since it can leverage its network infrastructure to offer more integrated services to its clients.

Proximus can gain exposure to high-growth markets

Proximus' acquisition of Route Mobile marks its entry into emerging markets such as India. With a majority stake in the latter, Proximus can now expect to consolidate its presence in the communications sector, particularly CPaaS, where it ranks third globally.

About the Route Mobile-Proximus deal

In July 2023, Proximus agreed to acquire a 57.7 per cent stake in Route Mobile through its wholly-owned subsidiary, Proximus Opal, for Rs 5,924 crore (Rs 1,626 per share). The deal was only finalised this month.

Besides buying a majority stake in Route Mobile, Proximus acquired an additional 25 per cent stake through an open offer to shareholders at the same price. It currently holds an 82.7 per cent stake in Route Mobile, making it the company's promoter.

Moreover, Route Mobile's founders have also committed to acquiring a 12.7 per cent stake in Proximus Group for a total consideration of around Rs 2,699 crore. This deal is set to close in the next few weeks.

Our view

Though the buyout stands to benefit both entities, being an acquisition, the threat of conflicts or disputes will always loom. Only time will tell if the expected benefits materialise.

Further, please note that this story only highlights the potential advantages and crucial aspects of the deal. It is not a stock recommendation.

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