Tech Mahindra sells stake in Altiostar to Rakuten Mobile for $45 mn

Becomes preferred partner for Rakuten Communication Platform

IT services provider Tech Mahindra has divested its holding in Boston-based Altiostar Networks to Rakuten Mobile Inc. This comes as Tech Mahindra has been appointed as a preferred partner for global go-to-market opportunities for the Rakuten Communications Platform (RCP).

As a part of the partnership, the Pune-headquartered company will sell 1.85 crore preferred shares for a consideration of $45 million to the Japanese e-commerce conglomerate. "As it is a minority investment there is no contribution to turnover or revenue by Altiostar Networks during the financial year ending 2020," according to an exchange filing. It is to be noted that the Mahindra Group company had purchased a 17.5 per cent stake in the virtualised radio-access network (VRAN) software firm for $15 million in 2018.

Rakuten Mobile and Tech Mahindra aim to drive innovation by transforming network services and enhancing customer experience globally. Based on the agreement, as a preferred partner, Tech Mahindra will provide its leading technologies and software capabilities to support the development and deployment of mobile networks for global customers of RCP. 

Through the agreement, Tech Mahindra will also provide managed IT, security and network services to Rakuten Mobile, and there are also plans to designate Tech Mahindra as an official reseller of RCP.

RCP is a cloud-native telco platform that enables telcos and enterprises around the world to easily build secure and open mobile networks at speed and low cost, to generate new revenue streams and to offer customers innovative and immersive experiences. RCP was developed by Rakuten Mobile and is based on its new generation mobile network in Japan which combines the latest technology in virtualization and automation, including containers and microservices, and is built on key secure operations principles.

Rakuten in its presentation on Wednesday said the operating expenditure of mobile operators could reduce as much as 30 per cent from current levels if RCP is deployed. "The network optimisation used done through artificial intelligence resulting in operational improvement. RCP is an economic solution for expensive 5G infrastructure investment," it said.

"As a global leading provider of digital transformation, Tech Mahindra is committed towards leveraging new-age technologies to scale digital services for our customers globally," said CP Gurnani, managing director and CEO of the company. "This first of its kind collaboration with Rakuten Mobile not only strengthens our existing partnership with them but will also enable us to drive innovation in the telecom space, provide enhanced customer experience and lead the transformation in mobile network technology from the forefront."

In July, Tech Mahindra foresaw a "bulk" of 5G investments getting pushed to six months into the financial year 2021-22 from current year due to the Covid-19 led uncertainty, according to Manoj Bhat, chief financial officer, Tech Mahindra. This includes 5G investments, roll-outs, and enterprise 5G projects.

Operators and tech companies can benefit from up to $619 billion market opportunity globally in 2026, according to a recent report by telecommunications giant Ericsson. It expects the global number of 5G subscriptions to top 190 million by the end of 2020 and 2.8 billion by the end of 2025. 5G will account for 18 per cent of all mobile subscriptions by 2025.

Highlights

• Tech Mahindra sells stake in Altiostar Networks for $45 million to Rakuten Mobile
• Becomes a preferred partner for its Rakuten Communication Platform (RCP).
• RCP powered by AI is expected to reduce operating expenditure and network costs for mobile operators by up to 30% from current levels
• 5G market potential is $619 billion by 2026 and will account for 2.8 billion users globally.