M&A Alert—March 12, 2012
SingTel Acquires Amobee
Transaction Size: $321mm
Amobee sells software which enables advertisers, publishers and wireless carriers to deliver targeted mobile marketing and advertising to mobile customers. Capabilities include mobile ad serving, campaign management, targeting, yield optimization, ad inventory management and campaign analytics. Marketing formats include WAP, web, messaging, apps and rich media targeted to device model, location, operator, device OS and site categories. Customers include eBay, Zynga, Google, Skype, Mozilla and Nokia. Carrier customers include Telefónica, Vodafone and Sprint/Boost. Other mobile advertising companies include Admob (acquired by Google), Quattro Wireless (acquiredby Apple), AdMarvel (acquired by Opera), Greystripe (acquired by Valueclick), Millennial Media, JumpTap, Velti, Mojiva and InMobi. Founded in 2005, Amobee is based in Redwood City and has raised $54mm in total funding from Accel (Bruce Golden), Globespan (Venky Ganesan), Sequoia (Halm Sadger), Motorola Solutions, Telefonica, Vodafone, AMDOCS and Cisco.
Singapore Telecommunications (Singapore Stock Exchange: Z74) is the largest telecom operator in Asia Pacific with 434 million mobile customers in 25 countries, including Bangladesh, India, Indonesia, Pakistan, the Philippines and Thailand. SingTel owns all of its Singapore and Australian operator businesses and owns minority stakes in six other mobile operators including India’s Bharti, Indonesia’s PT Telekomunikasi Selular and Thailand’s Advanced Info Service.
Currently, SingTel offers geo-localization capabilities that enable the delivery of relevant and customized offers and promotions. SingTel has also announced its intention to become the largest mobile advertising company in Asia Pacific and one of the top three worldwide. SingTel launched a $159mm fund in 2010 to invest in new ventures and also announced a reorganization of the company into three businesses: consumer, digital services and information technology for large business and government.
PEHub disclosed that Amobee’s 2011 revenue was $30mm, up 3x from 2010.
Enterprise Value: $321mm
Enterprise Value/Revenue: 10.7x
Other mobile advertising M&A transactions include Google’s acquisition of AdMob in November 2009 for $750mm (18.8 times revenue), Apple’s acquisition of Quattro Wireless in January 2010 for $275mm (13.1 times revenue), Opera’s acquisition of AdMarvel in January 2010 for $8mm-$23mm, Motricity’s acquisition of Adenyo in February 2011 for $100-$150mm and Valueclick’s acquisition of Greystripe for $70mm in April 2011 (2.3-2.8 times revenue).
Mobile service providers have a very significant new revenue opportunity available to them by delivering relevant, targeted marketing messages and advertisements to their customers. SingTel is taking an aggressive step toward that objective by acquiring the market share leading mobile marketing platform focused on servicing the needs of wireless carriers.
Architect Partners’ Observations
This transaction represents an important milestone in the evolution of wireless carriers into a partially ad driven revenue model. To-date, mobile carriers have been either cautious or just plain resistent toward integrating marketing elements into their services. Most carrier executives would justify this caution as “protecting the customer”. While high minded, the reality is that marketing and advertising has proliferated on mobile devices and the wireless carriers have been cut out.
Architect Partners believes other wireless carriers will follow SingTel’s lead; envisioning themselves more in the model of an MSO, where advertising is an accepted part of the experience. We believe that wireless carriers must aggressively begin to integrate the ad revenue model favored by their most notable competitors (Google, Apple, Facebook, Zynga, …) or risk being further marginalized. Wireless carriers own the customer relationship and have access to vast amounts of valuable data. Both are extremely valuable elements to marketers and therefore core tenants of value of the wireless carriers.