Euronet's epay division acquires Brazilian pre-paid firm Telecom Net
02 September 2010 | 3714 views | 0
Source: Euronet Worldwide
Euronet Worldwide, Inc. ("Euronet" or the "Company') (NASDAQ: EEFT), a leading electronic payments provider, today announced the closing of the acquisition of substantially all capital shares of Sao Paulo-based Telecom Net S.A., operating under the trade name Ativi ("Ativi").
Euronet acquired Ativi from a group of private equity investors, including Darby Technology Ventures, Intel Capital and Mifactory Fondo de Inversion Privado. Ativi distributes electronic prepaid products and bill payment services via a network of over 14,000 retail locations throughout Brazil.
The acquisition will provide opportunities for epay to distribute its portfolio of global prepaid products in Brazil and South America. Brazil is the largest economy in South America and has a growing population of 190 million with over 140 million prepaid mobile subscribers. According to ANATEL (the Brazilian agency of telecommunications) Brazil's prepaid mobile subscriber base is expected to grow 45% by 2013, and it is estimated that 40% of Brazil's population is unbanked.
"We are enthusiastic about expanding epay's reach, which encompasses operations in 24 countries with over 500,000 points of sale. Our global content partners, our consumer money transfer division, Ria, and our card processing division should all benefit from our presence in South America," said Charlie T. Piper, Managing Director of epay. "With a growing sales force of approximately 200 employees, Ativi positions us well to deliver Euronet's payment products and solutions to Brazil's high growth market."
The Brazilian market and the Ativi acquisition are attractive to Euronet for many reasons:
* Brazil provides a large and stable platform for expansion throughout South America.
* Ativi has relationships with all of the mobile operators in Brazil, who are aggressively pushing the rollout of electronic top-up networks into new regions.
* epay brings a portfolio of non-telecom products to under-served South American markets, such as digital music, point-of-sale-activated software, internet shopping cards, virtual currencies, online gaming and gift cards.
* epay's card issuing, card processing and stored-value processing platforms are in demand by South American companies looking to creakingeaking to create or expand prepaid offerings such as transport ticketing, prepaid debit, closed-loop gift cards and open-loop gift cards.
* epay's consumer financial services capabilities and regulatory compliance expertise can be leveraged into new consumer financial service products in markets that have high percentages of non-banked or under-banked populations.
* Brazil's growing economy continues to attract immigrant workers, providing an opportunity to expand epay's consumer money transfer services via Ria through Ativi's retailer network.
"The potential in Brazil is significant," said Michael J. Brown, Euronet Chairman and CEO. "The strategic opportunity in this acquisition is to leverage Euronet's portfolio of prepaid products together with Ria's substantial relationships and payment capabilities, to the benefit of South American consumers and businesses."
Ativi recorded approximately $44 million in revenue for the last 12 months which has grown 24% compounded annually over the last two years. Euronet expects Ativi to be accretive to cash earnings per share by contributing annual cash earnings per share of approximately $0.06, assuming a stable Brazilian currency exchange rate. Euronet financed the transaction with cash on its balance sheet.