Tech Mahindra sells stake in US firm to Rakuten for $45 mn, signs new deal

Homegrown information technology (IT) services firm Tech Mahindra on Wednesday said it has sold about 18.5 million shares of its investment in telecom software services provider Altiostar Networks for $45 million to Japanese firm Rakuten.

The Pune based company had acquired a 17.5% stake in Tewksbury, Massachusetts headquartered Altiostar Networks for $15 million, in January 2018.

“As it is a minority investment, there is no contribution to turnover/revenue/income and net worth by Altiostar Networks, Inc. during the last financial year,” Tech Mahindra said in a stock exchange filing on Wednesday.

Founded by Ashraf Dahod in 2011, Altiostar is a provider of 4G and 5G open virtualized Radio Access Networks (vRAN) solutions that support open interfaces and disaggregate the hardware from the software to build a multi-vendor web-scale network. Dahod had previously also founded Starent Networks.

Altiostar also has a presence in Britain, Germany, India, Mexico, Argentina and Israel with 220 employees, as per a Tech Mahindra’s disclosure in 2018.

Tech Mahindra also said that it had been appointed as a “preferred partner for global go-to-market opportunities” for Rakuten Mobile.

Rakuten Mobile is the unit responsible for mobile communications at the Rakuten group of companies that is mainly engaged in the internet, fintech, and mobile businesses.

The partnership, the statement said, will have Tech Mahindra support the development and deployment of Rakuten Communications Platform (RCP) and provide managed information technology, security and network services to Rakuten Mobile.  

“RCP contains all the elements of the Rakuten Mobile network, including telco applications and software from multiple vendors, Operations Support System and Business Support System, edge computing and virtual network management functions. RCP also incorporates an app-store-like interface where customers can tailor the platform to their local requirements,” the statement added.

Built on virtualization and automation technologies that include containers and microservices, RCP is a cloud-native platform that enables telcos and enterprises to build mobile networks. 

“This first of its kind collaboration with Rakuten Mobile not only strengthens our existing partnership with them, but will also enable us to drive innovation in the telecom space, provide enhanced customer experience and lead the transformation in mobile network technology from the forefront,” Tech Mahindra MD and CEO CP Gurnani said. 

Tech Mahindra share price on BSE last traded at Rs 792.8, down about 1% during the day’s close.