Reliance Acquires Yipes

MUMBAI, India, and SAN FRANCISCO -- Reliance Communications Limited today announced the signing of a definitive agreement to acquire U.S.-based Yipes Holdings, Inc., the leading provider of managed Ethernet services.

Anil D. Ambani, Chairman of Reliance Communications, said: “This is the largest acquisition that Reliance Communications has ever made. The acquisition of Yipes drives forward our strategy to offer the most sophisticated, cutting-edge data communication products and services, specializing in application and content distribution, spanning developed and emerging markets. We see enormous potential to rapidly expand Yipes’ coverage in the U.S. and to globalize Yipes service by leveraging our customer relationships and network reach around the globe. We confidently expect this acquisition to significantly enhance the growth rate, profitability and returns of our global data business.”

Yipes is the leading provider of managed Ethernet and application delivery services for the global enterprise. Established in 1999, Yipes has pioneered Metro Ethernet and has developed leading-edge proprietary products to meet the exacting requirements of its customers. Ethernet is the fastest growing segment of the data communications market, driven by the migration of enterprise customers from older private network technologies. Infonetics Research forecasts the Ethernet services market will surge by over 30 percent CAGR from 2006 to 2010 when it will top $25 billion worldwide.

Yipes has nearly 1,000 enterprise customers, concentrated across 4 industry verticals -- financial, legal, government and healthcare -- which currently account for 50% of the Ethernet market. Yipes has developed communications platforms that act as the oxygen for entire industry communities. For example, Yipes is the leading direct communications provider to the New York Stock Exchange, Chicago Mercantile Exchange and NASDAQ and interconnects with multiple market participants and intermediaries.

Yipes, headquartered in San Francisco, owns over 22,000 route kilometers of fiber across 14 U.S. metros, which covers around 40% of the total U.S. datacommunications market. In addition, Yipes is present in London, Hong Kong and Tokyo.

Promod Haque, Yipes Chairman and Managing Partner of Norwest Venture Partners, said: “We saw long ago the impact Ethernet services would have on the telecommunications industry. Yipes has consistently brought fresh ideas and tangible innovation to this market. This acquisition of Yipes by India’s powerhouse, Reliance Communications, sets the stage for a major transformation within global telecommunications.”

John Scanlon, CEO of Yipes, said: “Yipes pioneered metro Ethernet services, extended it across the U.S. and expanded globally. Using the latest technologies, we were able to create a highly reliable, global Ethernet services and application delivery platform. I am proud of what we have accomplished as a team at Yipes. We are fortunate to have the best people in the industry who know how to make things happen. By focusing on our customers’ needs, innovation and execution, we have moved the industry forward.

“With Reliance Communications, we aim to replicate our success in the U.S. across the rest of the world. The financial sector, in particular, presents a key opportunity for us as we are well positioned to capture the market by meeting the fast-growing and stringent connectivity requirements of financial exchanges around the world. The financial connectivity market alone is expected to reach $6.3 billion by 2010 and grow at around 35 percent per year.”

Reliance Communications Ltd. (RCom)