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'Yipes chief will move out after a year'

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Rajesh S Kurup Mumbai
Last Updated : Feb 05 2013 | 1:36 AM IST
, states that there is a lot of synergy between the two companies. Excerpts:
 
You have acquired Yipes from venture capital firms Norwest Venture Partners (NVP), Crosslink Capital, Sprout Group and private equity firm JP Morgan Partners. How much stake was held by each of them?
 
We are not disclosing the individual investments of partners in Yipes. We have acquired the company through Flag Telecom, a wholly owned subsidiary of Reliance Communications. The top management of Yipes has committed to remain with the company.
 
What role will NVP and Yipes Chairman Promod Haque now play?
 
Haque and some of the promoters will remain with the company for another year to enable us complete the integration of Yipes with Flag Telecom. He, however, will move out after a year.
 
What is the logic behind Reliance Communications' acquisition of Yipes, considering the fact that the San Francisco-based company is an ethernet and application services provider?
 
The acquisition of Yipes will help in placing Reliance Communications among the top three global ethernet service providers. We plan to use Yipes' ethernet services, double the coverage in the US domestic market and roll out Yipes services over the Flag Telecom's global network.
 
We see a lot of synergy between the two companies, while both the companies will also help in contributing to the growth Reliance Communications. Yipes has significant presence in the US market and functions under the financial services, healthcare and legal verticals. It is also a highly profitable company with gross operating margins at 55 per cent, and has over 1,000 clients across the US.
 
You are planning to integrate Yipes with Flag Telecom. What are the benefits that the combined entity will bring on board?
 
The combination of Yipes and Flag Telecom opens a vista of opportunities for the group. To begin with, Yipes has around 22,000 km of optical fibre cable laid across 14 major cities in the US. Flag Telecom can use this for its data operations.
 
Reliance Communications will also benefit from the strong presence of Yipes in the global markets. The telecom service provider has a network reach and customer relations in nearly 40 countries and an intense presence in India, West Asia and rest of Asia.
 
You also see a lot of opportunities in the financial exchanges in the country?
 
At present, Yipes provides services to some of the leading bourses in the US, such as the Nasdaq, the New York Stock Exchange (NYSE) and the Chicago Stock Exchange. We expect to replicate the same in the country and provide services to the National Stock Exchange, the Bombay Stock Exchange and commodity bourses in the country.
 
Do you expect this acquisition to help Reliance Communications become a global leader in the ethernet services space?
 
The ethernet market across the world is valued at around $10 billion and is forecast to grow at 30 per cent a year to over $25 billion by 2010. We expect to garner at least 10 per cent or $2.5 billion in the next three years, which will make us one of the global leaders in this space.

 
 

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First Published: Jul 18 2007 | 12:00 AM IST

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