Infotech acquires US telecom firm Wellsco to widen revenue to $1 bn

Infotech Enterprises, an engineering design and solutions firm, has acquired US-based Wellsco, a telecom engineering services provider. The buyout is an all-cash deal through its wholly-owned subsidiary, Infotech Enterprises America.

Infotech did not disclose the deal size. However, sources said that it could be less than $12 million, the annual revenue of Wellsco. This is Infotech?s third acquisition in two years.

Infotech chairman and managing director BVR Mohan Reddy said the company is in the process of strengthening its expertise in new market segments. It has identified strategic initiatives to enable the company clock $1billion in revenues by 2012.

?We may look at two or three more acquisitions by the year end. We have a cash pile of Rs 400 crore,? Reddy said.

The company is establishing a global network of engineering centres that offer its customers the right mix of proximity, skills and price besides forging strategic, long-term relationships with specific named accounts. Infotech is present in power utilities and telecom segments also.

Reddy added that there would not be any dilution of equity in this transaction. On leveraging growth through this acquisition, he said that it would not have any impact on margins in the short term, but would post growth in the long-term.

?The telecommunications industry has always been an important market for Infotech and telecom network design and engineering has emerged as an excellent growth area for us. With this acquisition, Infotech gains access to the deep domain skills and experience of the local Wellsco team, which combined with strong, long-term customer relationships and US delivery capability, will serve to accelerate our growth,? Reddy said.

?All market indicators suggest that we are at the early stages of the next major transformation of fixed and wireless networks as consumers continue to demand ever higher bandwidth and network capacity. Around $20 billion needs to be spent in the US alone on next generation fibre networks,? says John Renard, president, utilities, telecom & government (UTG), Infotech.

Earlier this year, Reddy had accepted that the company was under shareholder pressure and was aggressively scouting for value-based acquisitions. In 2008, Infotech raised about Rs 300 crore for acquisitions from General Atlantic.