Tata Communications to acquire US-based Switch Enterprises for Rs 486 crore, shares fall marginally

Tata Communications has proudly announced that they have entered into a definitive agreement for their wholly owned subsidiary, Tata Communications (Netherlands) to purchase the New York-headquartered Switch Enterprises.

With this acquisition, Tata will be able to expand its global reach and increase opportunities worldwide. This investment of Rs 486 crore only proves that the company is committed to furthering international development with immense potential for growth in many areas.

As per the agreement, Tata Communications will be acquiring a 100 percent stake in The Switch Enterprises and its international assets. This deal is estimated to cost around $58.8 million (Rs 486.3 crore) paid entirely in cash, as stated by the official filing document.

The expected timeframe for the completion of this acquisition is within 4-6 months, but likely sooner with all regulatory approvals obtained. We anticipate closing the transaction upon receiving said approvals.

Through acquiring Switch, Tata Communications can strengthen its video connect business while also broadening their reach into the media industries in both Europe and North America. As an end-to-end live video production and transmission services provider, The Switch is expected to be a valuable asset for Tata Communications that will greatly improve their overall performance.

Tata Communications recently released a statement to all exchanges, saying-

“With this transaction, Tata Communications will gain a strong foothold into America’s media and entertainment market, extend its portfolio into live video production and become uniquely positioned as an end-to-end media ecosystem player in the entire content development value chain globally.”

By securing 100% ownership of Switch Enterprises, Tata Communications will also be gaining its subsidiaries from Canada, the US and UK. The group is eager to diversify their portfolio with live video production as they strive towards becoming a complete media ecosystem player.

Following the deal’s completion, customers of Switch will benefit from an extended global reach spanning 190 countries and territories provided by Tata Communications. The company also stated-

“The Switch will bring state-of-the-art live production capabilities helping organisations to produce high quality, more immersive content faster and more efficiently.”

Since its inception in 1990, Switch has been delivering live content to a variety of mediums and outlets such as linear, on-demand and streaming platforms. Over the past year ending December 2021 alone, the organization achieved an impressive consolidated revenue figure of $81.6 million or Rs 674.8 crore!

In 2020, the company’s revenue was an unfortunate $68.6 million compared to its earlier figure of $76.5 million in 2019; however, 2021 saw a remarkable recovery with an increase in their earnings.

On Thursday, Tata Communications’ stock dropped an astounding 1% in the NSE exchange. This decline brings the total yearly decrease to 12%, with current trading prices at around Rs 1,260.

This month, Tata Communications took a major step forward towards strengthening their Internet of Things (IoT) business by transferring it to its wholly-owned subsidiary – Tata Communications Collaboration Services Pvt. Ltd. (TCCSPL). In exchange for this significant move, the company received Rs 42.34 crore in cash consideration!

Though the stock markets reacted unfavorably to Tata Communications’ news of buying Switch, we are sure that this is only a minor setback and that the company will soon be able to realize the potential benefits of this transaction.

We look forward to seeing what results this acquisition yields in the near future. Only time will tell!

Leave a Comment