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The management of Tata Communications told CNBC-TV18 that the company aims to deliver an end-to-end media platform through the acquisition of Switch Enterprises.
On Thursday, Tata Communications (Netherlands) B.V., a wholly-owned indirect subsidiary of Tata Communications Ltd. announced the acquisition of 100 percent stake in Switch Enterprises LLC, Ltd. for a total cash consideration of $58.8 million or Rs 486.3 crore.
Post the transaction, the unit will acquire the assets of the subsidiaries of Switch Enterprises based out of Canada, the United States of America, and the UK.
Switch is one of the leading managed services providers for live production and video transmission. It produces and delivers live content to any outlet including linear, on-demand and streaming platforms across fiber, satelite or internet.
Dhaval Ponda of Tata Communications told CNBC-TV18 said that the company will inherit a live, state-of-the-art production portfolio post the completion of the deal.
The transaction is subject to approval from the committee on foreign investment in the United States. The deal may close in the next 4-6 months or "as soon as possible" thereafter, subject to satisfaction of customary legal requirements.
For the full year ending December 2021, Switch had a consolidated revenue of $81.6 million or Rs 674.8 crore. The forex conversion used for the transaction is 1 USD = Rs 82.7. The company's revenue declined to $68.6 million in 2020 before a rebound in 2021. Revenue in 2019 stood at $76.5 million.
Tata Communications' management believes that the Switch production infrastructure model will allow Tata Communications customers to accelerate adoption of remote production from any event globally.
On completion of the transaction, The Switch Enterprises will join the Media and Entertainment Services (MES) business of Tata Communications.
Ponda further said that the deal brings extended reach to Tata Communications within the $8 billion production market. He also said that the Switch's growth has historically been in double-digits.
Last week, Tata Communications announced the transfer of its non-network Internet of Things (IoT) business to its wholly-owned subsidiary Tata Communications Collaboration Services Pvt. Ltd. for Rs 42.34 crore.
Shares of Tata Communications have declined close to 12 percent this year.