NTT Communications Corporation (NTT Com) recently announced that it
will acquire 74 percent of Netmagic Solutions, India’s
largest pure-play managed IT hosting services provider, with a
customer base of more than 1000, and a well diversified datacenter
footprint across major Indian cities. This deal is a win-win
situation for both firms.
NTT Com is one of the largest telecommunication companies in the
world, and the acquisition of Netmagic will give it access to a
growing Indian market. For example, research firm, Gartner, expects
the data center co-location and hosting market in India to reach
USD 609.1 million in 2012. Gartner believes that the market will
experience consistent growth through 2016 when the market is
forecast to total USD 1.3 billion.
For Netmagic, this deal provides it access to NTT’s global
base of customers, as well as the opportunity to launch its
services using NTT’s global reach. “NTT has 28 data
centers across the world, and we have a huge business opportunity
to provide our services from the global data centers of NTT. In
addition, we see opportunities for providing services to a huge
number of multinational customers of NTT who want to expand in
India,” states Sharad Sanghi, CEO and MD, Netmagic
Solutions. Despite the acquisition, Sanghi will continue to
lead the company as the CEO of Netmagic. While some private equity
investors have sold off the stake to NTT, Sanghi continues to hold
a sizeable stake in the firm.
From a domestic point of view, the acquisition brings into focus
the immense market potential of the data center co-location and
hosting market in India. “There is considerable interest
among financial investors and large multinational corporations to
invest in this market. As the year unfolds, one can expect some
more deals to happen,” opines Naveen Mishra, principal
analyst with Gartner's global Data Center Convergence Team. Mishra
says that the acquisition will allow Netmagic to scale its capacity
and extend reach across different parts of the country.
Netmagic, which has considerable expertise in providing remote
infrastructure management services and services related to the
cloud, sees a huge opportunity in expanding its entire portfolio of
cloud services across global data centers owned by NTT.
“Considering India’s price advantage, there is a
sizeable opportunity in providing remote infrastructure services to
NTT’s global customer base,” says Sanghi. In the
future, Netmagic will also work jointly with NTT to jointly create
products for the global market.
Considering the fact that NTT does not have a sizeable presence in
India, while Netmagic does not have a big presence outside India
– the acquisition complements the strengths of both the
firms, while expanding opportunities beyond the established base of
customers.
About Author
An award-winning journalist with more than 14 years of experience, Srikanth RP is Senior Associate Editor with InformationWeek India. Srikanth is passionate about writing on topics which clearly show the business impact of technology.
More articles by Srikanth RP