Persistent Systems, Sprint Nextel Form Joint Venture
Kansas-based telecommunications major Sprint Nextel Corporation and Pune-based outsourced product development firm Persistent Systems Ltd have joined forces to address the rising demand for connectivity and managed services by Indian enterprises.
Persistent also announced the successful closing of its acquisition of Infospectrum India and the OPD business of Infospectrum Inc. This buy allows Persistent to tap the European markets and expand to diverse sectors such as aerospace and defence, complex manufacturing, maritime, transportation and logistics, satellite imaging and geographic information systems, according to a Business Standard report.
Sprint International Holding, Inc. will be the majority shareholder with 74 per cent in the joint venture and Persistent will own 26 per cent stake. The investment is subject to the approval of the Foreign Investment Promotion Board (FIPB).
The unnamed joint venture will provide national and global long distance services, as well as Internet and managed network services within India.
Persistent is now targeting Sprint's global customers who are expanding in India. "We believe that through this joint venture, we will be able to service Sprint's customers even better, as they are keen to grow their business in India," said Anand Deshpande, chairman and managing director of Persistent Systems. The company is listed on both BSE and NSE.
The new JV will help Persistent strengthen its Indian telecom business, which focuses on IP communications, OSS/BSS and mobility. Currently, the company earns a significant portion (85.4 per cent) of its revenues from North America and 9.3 per cent from the APAC. Most of its clients (167) have revenues below $1 million but it also has nine large companies in the fold (with revenues greater than $3 million, as of the third quarter of fiscal 2011).
Persistent also has a strategic alliance with Salesforce.com to deliver applications using the Force.com platform. It is a certified Nokia Qt partner and is backed by Norwest Venture Partners, Gabriel Venture Partners, Intel Capital and Hewlett Packard Company, who together own over 20 per cent stake and have not exited the company yet. Persistent listed on the bourses in April, 2010.
The consolidated net profit earned by Persistent in the third quarter of 2011 was Rs 362.43 million, garnered from the sale of software products and services worth Rs 1949.32 million. The telecom vertical contributed to 23 per cent of its revenues while infrastructure and systems constituted 65.4 per cent and the life sciences generated 11 per cent.
In the last quarter, Persistent appointed Dr Dinesh Keskar, president of Boeing India, as an independent director on its board and launched an SEZ unit in Pune. The company employs 5400 people and has centres in Pune, Nagpur, Hyderabad and Goa.
Sprint Nextel has a mobile network Sprint in the USA with 3G services on offer. It also provides businesses and government users with fixed and wireless connectivity, VoIP solutions, IP convergence and MPLS services across 130 countries in the Americas and Asia through interoperability agreements with operators such as Orange Business Services and NTT Communications. As of 2010, Sprint had 49.9 million customers and also offers a 4G service in the USA. It also powers operators such as Virgin Mobile USA, Boost Mobile and Assurance Wireless, and has a global Tier-1 Internet backbone.