The streamlining at Nokia (NYSE: NOK) continues apace. Today it was announced that the Finnish company has sold its North American messaging business to Synchronica, a specialist in that field, for $25 million in cash. The deal includes operator-branded instant messaging and email services for 10 operators in the market — including AT&T (NYSE: T), Verizon, T-Mobile and Sprint (NYSE: S) — covering some six million users. The news comes a week after Nokia finalized a deal to outsource its Symbian OS to Accenture.
Other technology included in the deal is Nokia’s social networking gateway and client software. All three products come pre-loaded on Nokia devices worldwide, from feature phones through to Symbian handsets. Carsten Brinkschulte, CEO of Synchronica, says that the white-label, operator-branded product works on other data-enabled handsets as well, and are used that way by the operators. He was not able to say whether these would be used on the N9 Meego device coming out later this year.
The deal is a big win for Synchronica: it has up to now concentrated mainly on messaging services in developing and emerging countries — with customers including the entirety of America Movil’s footprint and all the major carriers in Russia. This gives it an entry point into one of the world’s most developed and mobile-data hungry markets.
In terms of revenues, Brinkschulte tells us that it will be paid US$18.2 million over in the next 18 months for Nokia to continue to preload the services into its own devices. Synchronica’s Brinkschulte is not disclosing the revenues for the operator-branded part of the business, except to say it is “significant.” Of the revenues from the OBM business, 80 percent are recurring-revenue-based, on a per-user, per-month basis.
This means the deal is effectively a reverse takeover, in that these new assets and their resulting revenues are greater than Synchronica’s existing asset and revenue base. Synchronica has halted its shares on the AIM and will be re-listing at the end of July, Brinkschulte tells mocoNews.
Synchronica says that part of the deal also includes a “long-term” relationship between the two companies for “continued development, maintenance, and support” of the messaging gateway and client software. Synchronica says it will be integrating the product with its own existing mobile gateway messaging services. That will add new features including document transcoding, PIM synchronization, and RCS instant messaging. It now has 1.8 billion end users of its services worldwide.
The deal will also include the transfer of 250 employees to Synchronica. The majority of them are currently in Montreal, Canada, with a significant number also in the U.S. and India. One hundred of them work on the Nokia-specific business, and the remaining 150 work on the white-label business for mobile operators.
Another very key part of the deal has to do with patents and IP: Synchronica is getting 10 patents as part of the deal; a further eight remain with Nokia, but Synchronica gets a royalty free license on them.
The all-cash deal of $25 million also includes the issuing of 18.3 million warrants to Nokia, to be exercised in three years to potentially buy shares in Synchronica.