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Quelle: Mergermarket
Germany’s cyan begins reaching out to bidders for BBS/OSS segment, mandates Drake Star to advise - CEO
German cybersecurity company cyan [ETR:CYR] is reaching out to potential bidders for its business support systems and operations support systems (BSS/OSS) segment as it explores various exit options, including a sale for the unit, CEO Frank von Seth told Mergermarket.
The company has appointed Drake Star in Munich to advise on a potential process for the BSS/OSS segment, also known as I-New, von Seth said.
It is in the early stages of contacting prospective buyers and expects to circulate teasers in the next few weeks, von Seth said. It has also received inbound approaches for I-New from interested parties, he added.
Last month, cyan said it was examining “all options,” including a sale for its BSS/OSS unit as it restructures to refocus its operations on recurring revenues from cybersecurity products for telecom companies.
Other potential scenarios for I-New include a management buyout, as well as separating the business from the wider company and setting it up under a different unit, von Seth said.
A sale could be the most likely option however given the preliminary interest it has seen in the market for the asset, he added. If launched, a transaction could be concluded during 1Q22, he said.
The right buyer would need to understand the segment’s “massive potential” and intend to continue developing I-New’s BSS/OSS business further, von Seth said.
Potential bidders for the asset could be mobile virtual network operators (MVNOs) with an interest in bringing BSS/OSS operations inhouse or looking to enter new geographic markets, von Seth said, adding that this could include MVNOs that are already clients of I-New.
Strategic players in cyan’s size bracket or larger with an interest in consolidating the market or expanding their global reach could likewise be possible suitors, as the BSS/OSS business could be very profitable for these firms provided they have a certain threshold in the market, he said.
While financial sponsors might also be interested in the asset, they would need to have an understanding of the business and its space to fully benefit, he said.
Munich-based cyan acquired a majority stake in I-New Unified Mobile Solutions in 2018 for EUR 17.1m from Austrian computer gaming company Novomatic, as reported.
While both cyan and I-New are active in the same broader space of telco cybersecurity, cyan was unable to generate sufficient revenue synergies with I-New given differences in their client base and distribution structures, von Seth said, adding that this was a factor in cyan’s decision to explore options for the unit.
Under cyan’s ownership, I-New was able to prolong its existing contracts with customers, win over new clients, cut costs and further improve its platform, said CFO Michael Sieghart, who sat in on the same interview.
The roughly EUR 10m revenue business has developed into a “very attractive target” in the three years since being acquired and is debt free and cashflow positive, Sieghart said. I-New operates in a growth market, but as its business is heavily geared to the low-cost MVNO space, it was difficult to cross-sell cybersecurity products to these customers and procure enough revenue synergies to be a focus area for cyan, he added.
The company is present in nearly all major geographies with its BSS/OSS segment, including Latin America, Europe and the APAC region, von Seth said. Reference customers for its BSS/OSS operations include telco brands Virgin Mobile, Skitto and Grameenphone, and the company is the “number 1” mobile virtual network enabler (MVNE) provider in Latin America, according to cyan’s website.
Services provided by the BSS/OSS segment include billing and policy control, voicemail and other network operations and can help drive revenue and subscriber growth among customers, the website continues. Customers can use the platform to build and manage mobile tariffs and loyalty campaigns, control data usage and offer emergency loans, among other services.
Revenue at cyan’s BSS/OSS segment amounted to EUR 2.15m in 1H21, down from EUR 15.3m in 1H20, according to the company’s half-year report. A license deal concluded with Virgin Mobile in 1H20 accounted for the segment’s “significantly higher revenues” in 1H20 compared to 2021, the report continued. The BSS/OSS segment has 35 direct customers and “millions” of active end customers worldwide, according to the same report.
In terms of its core cybersecurity business, cyan aims to focus on organic growth and expects to launch a number of projects with telecoms providers over the next year, von Seth said.
Its cybersecurity customers include telecoms and insurance companies who deploy cyan’s technology in their network, distributing it onto their own end customer base, von Seth said. It is now live in France with Orange, its largest customer, and will be moving into new geographies with the French telco in the coming months, he added.
In August, cyan said it is targeting revenue between EUR 10m-EUR 14m for the 2021 fiscal year, down from roughly EUR 25.4m revenue in 2020. Its market cap is roughly EUR 50.5m |
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