There appears to be a good old bidding war going on for another VoIP startup, Jajah, following yesterday’s news about the acquisition of Gizmo5 by Google, a source in Silicon Valley with knowledge of the talks informs us.
Details are scarce at the moment, but Microsoft, Cisco Systems and Telefónica Europe (O2) are said to be looking to buy the venture capital-backed company for a price ranging from $200M to $400M. We’re digging for more information.
Jajah was founded back in 2005 and in March 2006 introduced the world to a pretty decent consumer service that allowed cellphone users access Jajah’s low-cost calling system through their mobile devices, over the Web. Jajah went on to raise $28 million in VC funding from investors like Sequoia Capital, Globespan Capital Partners, Deutsche Telekom and Intel.
The Skype rival amassed about 10 million users when in April 2008 they announced a deal that would bring its premium voice services to nearly 100 million Yahoo Messenger users more. The deal proved crucial for Jajah, which connected its 1 billionth call last Summer. And that was before it turned to Twitter to spread the voice service even more.
Jajah says it currently serves over 25 million consumers and business callers in more than 122 countries, and provides calling access to more than 200 destinations globally. It’s unclear how much revenue it is generating from these users, but it’s apparently enough – or has enough potential to scale and grow – to make for an interesting strategical acquisition target for companies with deep enough pockets to engage in a bidding war.
It’s odd to see O2 mentioned as one of the companies who’s sitting at the negotiation tables, and I consider Microsoft and Cisco to be more likely buyers. Both of them sit on heaps of cash and are undeniably acquisition-hungry, and Redmond has the added benefit of having entered into a partnership with Jajah on enterprise IP communication solutions.
The price range seems to be on the high end, but that’s what happens when a bidding war goes the way the company that’s on the table (and its financial backers) would want it to go.
We’re cataloging this as a solid, plausible rumor for now and will update with more information / confirmation as soon as it comes in.
Good luck to the people of Jajah!
IMO Jajah is one of the top 5 startups in Israel at the moment.
Jajah is originally from Austria. Anyway, I do not understand how anybody can spend $$$ for this service when Gizmo was available for only 30 million$.
Jajah has a bad service and calls are (relatively) expensive.
Good Luck, sounds like a superb deal!
Interesting to see. We have integrated Jajah into CloudProfile for our click-to-call capability and have been pretty satisfied with the service and platform. My sense is that they would benefit from the resources and infrastructure investments that would come from an acquirer.
In terms of O2 being at the table, there is some precedent for this with BT having acquired Ribbit (”Silicon Valley’s First Telephone Company”) just over a year ago. BT’s continuing to innovate with Ribbit and it is causing other carriers to think more deeply about it – http://bit.ly/1iIkwz. Perhaps the real surprise should come from VOIP players (including Skype) not being picked up by telecom providers earlier…if carriers don’t innovate to go far beyond voice services then I think they will have some real problems once broadband becomes commoditized in the same way land line voice has.
You really got me thinking, Robin. Your surprise about O2 being at the table prompted me to write this post – “Carriers That Don’t Innovate Beyond Voice Have a Death Wish” http://bit.ly/12nFTl.
The writing on the wall for voice carriers is so clear to me.
Thank you. O2 being at the table actually makes the most sense and should be seen exactly as your response noted. Where have the telecoms been all along? The intimation that O2 being at the table is somehow wrong hints at being under informed. Clearly O2, Ribbit, BT and Jajah are all in the business of connected calls, making them peers of a sort. I admit to having been wary when BT took Ribbit on, but so far it appears to have been a good thing for end users so far.
What actually is odd about this is that O2 and BT are both European telecoms. British in fact. The other bidders if the reports are accurate, are MS and Cisco, both purely technology firms compared to being outright telecoms. That said, does this reveal a bias, arrogance or fogyism in the Rupert Murdoch, ‘I’ll hide my internet properties from Google…’ as in the ‘old business model in the clutches of death sort of way’; on the part of telecommunications companies and how they see the new kids?
At the very least, being that O2 and BT are in the same market and so direct competitors, maybe that Ribbit thing is going really well over there and 02 feels compelled to have an answer. Again, O2 being at that table makes the most sense!
$400M would be a fantastic exit.
Surprised at the price tag with the low margins in the telco business. Another strong acquisition target for this acquirer syndicate should be Sabse Technologies (which has so far acquired jaxtr and Mobivox). Sabse now has a strong user base, strategic telecom partnerships worldwide, and real technology.
Margins are constantly racing to zero. Why would anyone pay anything for such a business.
If I had a dime for every time Microsoft has been rumored to be buying Jajah, that might end up close to the fictitious purchase price being floated here.
Like the numerous IPO and acquisition rumors of the past (posted on this blog and others, google it), these rumors being are once again being shamelessly floated by Jajah execs, desperate to get out of the mess they are in (founders ousted, several down rounds, turmoil including hostile takeover attempts by their Israeli engineering team, etc.)
If there are bidders, lets hope they don’t fall for it and start bidding against these fake figures. Since even if they pay $50M, they’ll quickly be regretting their purchase.
They had also announced an IPO. For 2007!
Then Jajah pushed back its IPO plans until the second or third quarter of 2008, co-founder Roman Scharf told Reuters.
That would have been one year ago.
RRS Capital Strategies Services from Vienna credited them an evaluation of 2.9 billion dollars as “fair value” in May 2007 after the investments by Deutsche Telekom and Intel.
Jajah is always good for such a story. I wonder why Deutsche Telekom isn’t among the alledged buyers. The have a stake already.
>If I had a dime for every time Microsoft has been rumored to be buying Jajah, that might end up close to the fictitious purchase price being floated here.
I’ve been using the service for the past two years, it is very reliable and offers a relatively unique method (2 calls are initiated by the service) which is best utilized with landlines calls, but is far more expensive for mobile calls (outside the US pricing).
I think its hard to value the enterprise without seeing their revenue figures, but it could be compared to Skype in terms of ‘paying users’. Jajah only has paying users (25M) while Skype has over 400M users out of which <10% are paying, possibly even <5%. That brings the figure of paying users to a par, and I'd say that Jajah generates more revenue per user because of the double calling method. So if Skype is worth $2.5B, which is derived from the technology, general audience and paying users. If we say that Skype's paying users represent half of this value, than Jajah's price tag of $400m seems like a bargain.
I love JaJah, they deserve it. Much hard work and innovative.
Hey, irrational stupidity….
Seems everyone is waking up to the huge payday waiting for these VOIP services once blanket WiFi is rolled out by AT&T and Verizon in the next 5 years.
I say these bets are the right ones.
I can’t wait to have the option to buy a “Vonage Wifi Phone” and carry my (212) phone number with me.
The one feature that has kept me on Jajah despite cheaper intl calls on Google Voice for example, is the fact that for each intl number i need to dial Jajah gives me a local number. This way I can dial directly from my mobile without having to go through a unique Jajah or Google Voice number first.
For me it’s exactly like calling anybody else in the US.
You can use Google Voice in a similar manner by storing + P + 2 + + P + in your phone contact.
Online telephony is a very hot market and has a feasible business model unlike so many internet sites so theres no reason for them not to prosper …
rumors are created when deals are not quite going thru.
You can use Google Voice in a similar manner by storing [Your GV number] + P + 2 + [Your GV PIN] + P + [International number] in your phone contact list.