Nokia concludes a deal for the sale of its operator branded messaging business

Nokia is all set to sell its Operator Branded Messaging (OBM) business. The buyer being an email service provider, Synchronica who are to pay $25 million; $4 million to be paid in cash, following the completion of the acquisition while the rest payable on a deferred basis. In addition to which, 18.3 million warrants in respect of ordinary common shares in Synchronica would be issued to Nokia.
Initially, Nokia had acquired the Operator Branded Messaging business as part of the acquisition of a Canadian messaging vendor in 2008. It provides white-label mobile Email and Instant Messaging services compatible with a wide range of devices to North American operators.
Synchronica is known to have finalized deals to raise $15 million through a share issue that will constitute close to 38 percent of the company’s enlarged issued ordinary share capital, so as to be able to fund the acquisition, in addition to providing additional working capital for the extended group.
Under the umbrella of the deal, about 150 Nokia employees both externals and contractors will be handed to the company. This move is expected to facilitate uninterrupted development, maintenance and support for Nokia’s mobile operator customers when Synchronica assumes operations. Nokia is also looking to keep on providing the NMS offering in Nokia handsets. Support and development will be provided by Synchronica to be mandated by a professional services contract which will see close to 100 more of Nokia employees both externals and contractors reassigned.
10 operator contracts that include tier-1 mobile operators spread throughout the United States of America and Canada constitute the OBM customer base. Nokia is also to assign operator contracts with AT&T, Sprint, Verizon, T-Mobile, Bell Mobility, Rogers Wireless, including others to Synchronica, as part of the transaction. There are over 6 million active users as the OBM operator contracts generate above 80{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} recurring revenues based on monthly payments per active user.
Synchronica is also known to have sealed a contract to support Nokia’s Messaging Service in the next 18 months that will see close to $18.2 million revenue generated by the company. This represents a durable relationship between Synchronica and Nokia for the continued development, maintenance and support of the gateway and Nokia Series 40 client software, which is pre-installed on millions of Nokia phones.