Virtual network operators are companies which lease infrastructure and bandwith from others but provide and manage the communication needs of their clients.
The company which was looking for a buyer, had asked potential suitors to put in their bids on Friday. Reliance had competition from around eleven other leading telcos and PE firms which includes British Telecom, Cable & Wireless, T-Systems a part of Deutsche Telecom, NTT, Global Crossing, CPCnet and PE firms like Oakley amongst others.
According to sources close to the negotiations, most of the discussion points with Reliance have been agreed mutually and the process of signing the deal is on.
The deal would be inked within 24 hours and Reliance will be buy a 100% stake in the company. A Reliance Communications spokesperson however declined to comment on the issue.
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While the final price of the deal is not known, at its peak the market capitalisation of VANCO stood at $800 million but trading of the company shares were suspended after the company gave a major profit warning and parted ways with its founder chief Allen Timpany.
Sources say that lenders lead by Lloyds TSB had extended an overdraft facility to the company for over pounds 123 million might not get their full money back.
Earlier, Reliance Communications had acquired US based Yipes, an Ethernet Service Provider. The company is rolling out the proprietary Yipes services from the current 14 cities in US to over 40 countries, including doubling the coverage in US.
In end April, RCOM had acquired eWave World, an emerging market with the and parted ways us 4G operator focused on Asia, Latin America, Western Europe and African continents.
Vanco which has been under financial trouble operates in over 230 countries across the world with over 800 new product offerings that VANCO has developed over the last 20 years.
VANCO has over 200 clients primarily headquartered out of UK, France, Germany, US and Singapore. Its client list includes top corporate like British Airways, Siemens, For Motor Company and Avis Europe amongst others.
Reliance Globalcom has been looking at forging alliances with regional and domestic carriers, which would also come along with the acquisition of VANCO. VANCO's existing relationships are with 700 carriers across the world.
The acquisition is in line with RCOMs strategy for becoming among the globe's top five data communications players. RCOM is already constructing a 50000 km undersea cable network which would take its fully IP enabled network to 70 countries spanning 1,15,000 Kms.
While on one hand, it would boost the wholesale capacity business of the company, on the other hand the company is building multiple product lines to address the enterprise and corporate markets.
The new network would also add to the existing retail voice capabilities of RCOM which already serves over 1.5 million customers across international geographies.
VANCO has over $650 Mn worth of secure long-term contracts from its customers that would be accrued over the next 3-5 years.