Blog Post

India's Reliance Buys Yipes For $300 MM

[qi:066] They say, any exit is a good exit. So from that perspective the investors of Yipes, a managed Ethernet services provider based in San Francisco must be feeling really good. They invested $100 million in the new Yipes, a company with a tumultuous history, and were rewarded when Reliance Communications of India acquired it for $300 million this morning.

The news has to be gratifying (not to mention rewarding) for Promod Haque of Norwest, who has been backing this company for almost a decade, sticking with it through thick and thin. The deal works out to about 10 times 2006 revenues. In a recent interview, Yipes CEO John Scanlon told us that Yipes was on track to do $70 million in sales this year and is cash flow positive.

Reliance also owns FLAG Telecom and this purchase makes them a competitor to Level 3 (LVLT). Yipes extends the reach of FLAG into US metros, especially in the Bay Area and East Coast. The traffic between India and US is on an upswing, and the deal makes perfect sense. Reliance will have to keep buying if they want to be competitive in US. It will also be interesting to see how the pros at Yipes handle the meddling family-style management of Reliance.

6 Responses to “India's Reliance Buys Yipes For $300 MM”

  1. ron baner

    Oh sorry, I shouldve guessed: Cogent is BIG in the US, so I presume they may be Number 5 or so…but who else is still a big player? PLease xclude those that have already been bought by one of the others (someone said Bellsouth, but why list them spearaetly? they are part of ATT now)

  2. ron baner

    Hey Om (or anyone who knows the answer)
    Two questions:
    1. Is Telseon dead? Who picjed up their assets if so?
    2. Somewhere they mentionned in terms of Metro Ethernet services for biznesses, Yipes now ranks Number 7. If so, who are the six ahead of them? They mentionned the three ILECs Verizon, ATT,Qwest, which makes sense, and Sprint; so who do you think may be NUmber 5 and 6?

  3. Sajith

    Om, The meddling-family style mgmt is in the past. Reliance Comms is managed by the younger brother, Anil Ambani and $300 mn for Yipes is too small fry for him to think off. He has got bigger things like a massive network expansion. There are a lot of other things happening in companies under his control like expansion in Reliance Capital – broking, insurance etc.