E-retailer Snapdeal.com said on Wednesday it bought online mobile recharge firm Freecharge for an undisclosed amount in a bid to boost its reach in the fast-growing mobile transactions business.
Snapdeal, backed by SoftBank Corp, competes with Flipkart and Amazon.com Inc's India unit in the country's online shopping market, which is expected to be worth USD 102 billion by 2020, according to Morgan Stanley.
Easy availability of smartphones and cheap data plans have resulted in most of those transactions to be made via apps, where consumers use their mobile phones for everything from buying clothes to booking movie tickets.
Freecharge allows users to top up amounts on their mobile phone or internet connections and get coupons as reward for using its service.
Snapdeal Chief Executive Kunal Bahl said 1 million mobile transactions would take place daily once the companies are combined. About 75 percent of all Snapdeal transactions now are through mobile users, he said.
Freecharge would remain an independent platform even after the deal, which is expected to close within the next 6 months, Bahl said, without specifying how much much it paid to buy the mobile recharge firm.
With the acquisition, Snapdeal would become "the largest mobile commerce company in India," the company said in a statement.
In an exclusive interaction with CNBC-TV18, Snapdeal founder Kunal Bahl spoke about the acquisition and the company's state of the business.
Below is the transcript of the interview.
Q: What attracted you to Freecharge?
A: Freecharge is the largest standalone platform for processing Mobile recharges and utility payments in India. There are 75 million recharges in India that are done every day out of which only 2-3 million are done online. We believe eventually tens of millions of these recharges will be done online.
Q: If you can talk about the deal size or at least give us the structure that is involved in the deal?
A: It is a stock plus cash deal. Majority are stocks and not cash. Most of the Freecharge shareholders have taken stock in Snapdeal which we are very happy about. It is a strong signal of their confidence in the combined partnership and it is also a further enablement of our business because new partners, new investors with their own global networks bring a lot of value to our business as well.
Q: What is the current growth rate and how much percent do you think it will reach may be by the end of 2015?
A: In the last 12 months we grew by about 500 percent year on year which is incredible growth because we are not on a small base anymore but with the Freecharge acquisition that growth should accelerate even further.
Q: I know you are well capitalised at the moment but in the next 24 months are you looking at raising more funds?
A: There is a lot of investor interest in Snapdeal especially with this Freecharge acquisition. I think people are realising that we are building something much more than just a single monolithic platform but we have to be thoughtful about what we are doing. It is not the amount of money you have in the bank, it is how you spend it that matters. Till now I feel we have been spending it quite thoughtfully. If in the future we need to raise more capital for some strategic reasons we will surely talk to investors.
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