WiMAX player, Telsima is reportedly in talks with US based Harris Stratex Networks for majority 
stake sale (but as far as we know, it’s an acquisition).
The acquisition stake amount, as reported in ET stands at $55 million – 2x times the annualised revenue figures.
Telsima, was one of the high profiled startups from the dotcom era and received funding from Vinod Dham, Tushar Dave, NEA and Intel Capital.
Some perspective and Questions:
- Telsima raised nearly $92 Million dollars in nearly four rounds of funding.
- The entire deal looks like it is a distress sale.
- Clearly looks like the team did not get anything out of this. Even investors might have lost some money. Clearly it is not a deal that makes Telsima proud of it.
“While the valuation appeared attractive in the current market conditions, it might not have offered any significant upside to the investors.” – ET - What does this mean of Vinod Dham’s companies. Most of them are floundering. Not a single success story so far. Even his association with Satyam is not a great thing to talk about.
Is it a good thing for WiMAX or Wireless Infrastructure companies? Would new investors invest in such big stories anymore? Clearly looks like this will send shivers down their spine.
Any insight/opinion?
I don’t think the acquisition amount is $55 mill – that is the value of the majority stake that was purchased by Harris. So best case scenario, valuation is around $110 million (assuming that the majority stake was just above the 50% mark) and worst-case is a lil more than $55 million, right?
Cheers,
Sumanth
@Sumanth, Thanks for pointing the mistake.
Have corrected it.
Also, it looks like Telsima had a huge debt burden too (over $25 million) – servicing that might not have been easy in today’s tough environment which might be a proximate factor influencing the sale. That said, your hunch that this might have been a distress sale might be on the spot given that Harris itself is not doing all that well at this point in time and would have been bearish on acquisitions in general unless they got a really tempting deal!
Telsima is an example of letting one person’s ego drive the business. Telsima and Satyam not only share a board member but also lack of any governance. A lot was spend for flying the CEO from Florida to Slovenia and India and putting him up at Leela Palace 2 to 3 weeks every month for about 3 years. Telsima acquired two shipping products. One of them had more than 50% operating profits. However, ego to proove that WiMax in India at rock bottom price using first generation silicon drove them to dump prfoitable and shipping products and go after the moon.
Banares Pundit, you are very much right. Egos of non-performing VPs are also taking telsima down.