ValueFirst acquires Way2sms.com, 160by2.com

Digital media company ValueFirst is pushing its inorganic growth strategy as it acquires Hyderabad-based consumer Internet firm Way2online, which owns and operates Way2sms.com and 160by2.com. It is an all-cash deal, reported to be around Rs 200 crore.

"The transaction is one of the largest acquisitions in the Internet industry in India that makes ValueFirst the largest digital media company in the country in terms of revenues, as well as number of users. With this acquisition, ValueFirst will cross 50 million profiled registered users and add 40,000 fresh registrations daily," a statement issued by ValueFirst said.

The acquisition is being funded through internal accruals and by ValueFirst's investors – New Enterprise Associates and Headland Capital. The deal would give ValueFirst access to multiple platforms like Internet, voice, SMS and e-mail. According to a company statement, Way2SMS adds 30,000 new registrations daily and has more than 500 million contacts.

ValueFirst has been following an aggressive inorganic strategy over the last three years. It acquired mobile VAS firm Cellnext Solutions Ltd in October 2009, again in an all-cash deal. The company also acquired Noida-based Packet Shaper, a telecom software and product development firm, and picked up a majority stake in the social media firm Tagg.in for an undisclosed sum in April 2010. It also made a strategic investment in Indyarocks.com, an online and mobile social entertainment platform.

"V. Raju, the founder and CEO of way2sms, and his dedicated team have created a great asset that has huge scale, traffic monetisation and excellent engagement with consumers. The potential to build further on way2sms.com and 160by2.com is immense as ValueFirst can now leverage the huge inventories that these sites have through their large sales infra and 4,000-strong client base," said Kumar Apoorv, CEO of ValueFirst.

He also had a quick chat with Techcircle.in, here are the excerpts.

What does the acquisition mean for ValueFirst? How did you decide on it?

The acquisition gives a huge advantage over other players in the digital media space as we can now offer solutions across Internet and mobile that other digital media companies cannot offer.  Also, since we now have a large profiled user base, we can do niche targeted campaigns.

We were looking out for an Internet asset with a large registered user base and traffic to complete our digital media portfolio, and Way2SMS fit that bill perfectly. It's a brand that creates massive repeat engagement with its existing user base and also adds 40,000 new registered user's everyday– which shows its virality.

Did existing investors put in fresh cash for the acquisition?

The acquisition was done from past reserves of previous funding rounds – and internal accruals of the company. This was made possible because we have been profitable pretty much since the second year of operations and have grown profitably at 80-100 percent each year.

What is the future of Way2SMS and 160by2? Has the Way2online team joined you?

Both Way2SMS and 160by2 will continue to run as separate brands. We will also differentiate the two in terms of product and feature enhancements so that they can address different target audiences in the market.

As of now, the Way2SMS team is focused on growing Way2SMS by harnessing the ValueFirst infrastructure. Over the next 8-12 months the team will help in the transitioning of the business to ValueFirst and future course will be decided as we move further into this transition period.

You now have 50 million registered of users, how are you planning to increase the number?

This financial year we are looking to cross 75 million registered users. Already 30,000 new registered users are coming from Way2SMS and 160by2 and we also have a couple of other inorganic opportunities lined up.

What are your expansion plans? Any plans of acquiring a company outside India?

Right now the focus is on integrating Way2SMS and launching new products in ValueFirst to grow to over Rs 250 crore in revenue in this year. We also have a couple of other acquisitions lined up in the Internet space. Another area which we are looking at is mobile Internet, and we are looking for interesting assets in this space.

Also, we have a strong presence in the Middle East but for now we are not considering an acquisition outside India.

Any plans for an IPO?

It depends on the market conditions– we are currently looking at a window of 18-24 months.