Spanish Telecom giant Telefonica’s (TEF) subsidiary O2 has officially wrapped up the acquisition of VoIP (Internet phone) services and application specialist Jajah Inc. following the approval of the Spanish Competition Authority (“CNC”). Telefonica will keep the Jajah brand.
Telefonica announced the acquisition of Silicon Valley based Jajah in December 2009 for €145 million (US$207 million) in an all-cash transaction. The deal is similar to eBay’s (EBAY) $3.9 billion acquisition of Skype in 2005 and Google’s (GOOG) $50 million take over of GrandCentral in 2007 which now operates as Google Voice. Skype competes with Jajah and both offer cheap calling plans to win customers.
Leveraging its own virtual network infrastructure, Jajah offers VoIP services that enable its customers to bypass long-distance fees by connecting their calls over the Internet. Industry sources reveal that several companies such as Cisco Systems (CSCO) and Microsoft (MSFT) were also eyeing Jajah.
VoIP services, which represent a significant threat to traditional network-based phone services, is about to see mercurial growth in the next several years, driven by widespread access to broadband Internet and availability of cheap VoIP services. The global consumer VoIP market is forecasted to reach roughly $44 billion in 2013.
Jajah’s services are currently used in around 200 countries by approximately 25 million customers. The company’s services are integrated into instant messaging applications such as Yahoo! (YHOO) messenger and social network applications such as Twitter (via “Jajah@call” Twitter service), as well as Jajah’s own direct-to-consumer offer.
Jajah’s business solutions provide seamless IP communications services across the organization, regardless of location or device and are used by several small-to-medium and large enterprises throughout the world. The company’s managed services enable mobile operators, landline carriers, cable companies, technology companies and other businesses to adopt its voice solutions with minimal investment and time to market.
Acquisition of Jajah has strengthened Telefonica’s capabilities to offer cutting-edge on-line voice communications services to its customers. Telefonica can leverage Jajah’s cheap international calling plan to entice new customers (and retain existing accounts) and boost its share of voice minutes, especially in Latin America where the Spanish carrier has a strong presence.
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