Sinch Acquires Inteliquent for $1.14B - Challenging Twilio in the US

Sinch Acquires Inteliquent for $1.14 Billion

Following a $690 million funding round from SoftBank in December, Sinch, a Sweden-based cloud communications provider, has executed its acquisition strategy. The company announced today the purchase of Inteliquent, a U.S.-based interconnection provider for voice communications, currently under the ownership of GTCR, a private equity firm. The transaction is valued at $1.14 billion in cash.

Financing the Acquisition

To facilitate this deal, Sinch has secured financing totaling SEK8.2 billion – equivalent to $986 million – from Handelsbanken and Danske Bank, alongside existing credit facilities.

Expanding Sinch’s U.S. Market Presence

This acquisition will provide Sinch, a direct competitor to Twilio, with a substantial presence in the U.S. market. Sinch offers a comprehensive suite of messaging, calling, and marketing (engagement) APIs designed for integrating communications into mobile applications and other digital services.

Inteliquent’s Profile

Inteliquent, a profitable enterprise with 500 employees, reported revenues of $533 million, a gross profit of $256 million, and EBITDA of $135 million in 2020.

The company positions itself as one of the largest voice carriers in North America, serving both service providers and enterprises. Its network reaches 94% of the U.S. population, connecting to all major telecommunications companies.

Annually, Inteliquent processes over 300 billion minutes of voice calls and manages more than 100 million phone numbers for its customer base.

Future Financial Strategy

Sinch is currently publicly traded on the Swedish stock exchange, with a market capitalization of approximately $13 billion (108 billion Swedish krona). The acquisition raises questions regarding potential expansion of the company’s financial operations into the U.S., possibly including a stock listing. A request for clarification on future plans has been submitted to the company.

CEO Statement

Oscar Werner, CEO of Sinch, stated, “Establishing Sinch as the leading global cloud communications platform necessitates a leadership position in the U.S. voice market.”

He continued, “Inteliquent delivers superior quality to the largest and most demanding voice customers in America, supported by a fully-owned network throughout the U.S. The combined strengths of our voice and messaging capabilities uniquely position us for growth and enhanced customer experiences.”

Inteliquent’s Service Offerings

Inteliquent provides services in two primary categories:

• Communications-Platform-as-a-Service (CPaaS): API-based services for voice calling and phone number provisioning.
• Infrastructure-as-a-Service (IaaS): Legacy products for telecommunications companies, including off-net call termination and toll-free number services.

While both segments contribute roughly equally to the total business, the CPaaS division is experiencing growth at twice the rate of the IaaS segment.

The company experienced increased demand for its services in the past year, driven by a shift towards remote communication. Even adjusted for the impact of COVID-19, revenues remained strong at $499 million.

Sinch’s Acquisition History

Founded by CLX in 2008 (following a rebrand after CLX acquired Sinch, which originated from Rebtel in 2014), Sinch has consistently pursued acquisitions to broaden its geographic reach and service portfolio.

Recent acquisitions include ACL in India for $70 million and SAP’s digital interconnect business for $250 million. These moves, alongside Twilio’s acquisitions of companies like SendGrid ($2 billion) and Segment ($3.2 billion), highlight the ongoing consolidation and substantial value within the digital communications space.

Previous Ownership

Inteliquent was previously held by GTCR, a Chicago-based private equity firm. According to PitchBook data, its latest financing was a mezzanine loan from Oaktree Capital in 2018, totaling just under $19 million.

Notably, Inteliquent has also actively invested in emerging communications startups, including a Series B funding round for Zipwhip, a company focused on integrating mobile messaging into traditional landline systems.

Inteliquent CEO Comments

Ed O’Hara, CEO of Inteliquent, remarked, “This combination unlocks significant opportunities, expanding the services we can offer to our customers.”

He added, “Integrating our leading voice capabilities with Sinch’s global messaging expertise positions us for leadership in the rapidly evolving cloud communications market.”