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NeuStar Buys Followap for $139M

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
11/28/2006
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IP peering and ENUM (electronic numbering) specialist Neustar Inc. (NYSE: NSR) has bought British firm Followap Inc. for a cool $139 million in cash to improve its mobile messaging capabilities, particularly in Europe and Asia. (See NeuStar Buys Followap)

Followap has developed technology that enables mobile operators to offer instant messaging (IM) and presence-based services to their customers by enabling interoperability between the carriers' systems and the Internet portals and messaging gateways that enable IM. (See Followap Touts IM Hub.)

NeuStar forecasts that Followap's revenue will exceed $25 million in 2007 and more than double in 2008. The firm says that at the end of 2005, there were an estimated 12 million mobile IM users worldwide -- expected to double every year between now and 2009, and grow to nearly 200 million by the end of the decade.

Followap, which has been in business since 1999, was privately backed by investors including Carmel Ventures , Star Ventures , and Sequoia Capital . It's not known how much the company had raised.

Sterling, Va.-based NeuStar is best known for providing Internet clearinghouse services that enable interoperability between IP networks such as VOIP peering, where it competes against rivals such as VeriSign Inc. (Nasdaq: VRSN), and number portability services to U.S. carriers. (See NeuStar Buys DNS Player, NeuStar Extends Contracts, VOIP Peering, NeuStar Moves Into SIP Peering, and NeuStar's New Portability Play.)

But it is also one of the leading players in providing ENUM (electronic numbering) services -- whereby a telephone number is linked to an IP address, enabling people to place a call to a VOIP device by calling a regular phone number. Neustar is one of a handful of companies competing in the increasingly important ENUM registry sector. (See XConnect Takes Out Pulver's IPeerX.)

The Followap acquisition potentially gives Neustar an edge in providing its services, including ENUM and VOIP peering, to mobile carriers, where Followap has built a small but impressive customer base of 17, including Vodafone Group plc (NYSE: VOD), Turkcell Iletisim Hizmetleri A.S. (NYSE: TKC), and Wind Telecomunicazioni SpA . (See Followap Wins at Wind.)

Neustar says Followap will form the core of its Next Generation Messaging group, and will enable Neustar to create a service suite for mobile operators that includes inter-carrier real-time multimedia messaging; mobile ENUM; presence and availability services that utilize a mobile user's existing contacts; and location-based services.

News of the acquisition will no doubt interest mobile operators looking for the best way to enhance their service offerings as they ramp up their data connectivity capabilities with 3G network rollouts.

It will also be of interest to Followap's rivals in the mobile messaging space, such as Air2Web Inc. and Openwave Systems Inc. (Nasdaq: OPWV), and its partners, including Nortel Networks Ltd. , which counts Followap among its most important IMS (IP Multimedia Subsystem) partners. The good news for Nortel is that it's already working closely with Neustar. (See Nortel, Followap Team.)

Other Followap partners include Ericsson AB (Nasdaq: ERIC) and HP Inc. (NYSE: HPQ).

Mobile messaging is on a roll right now. Just yesterday Unstrung noted that one of the reasons for major VC investments in the mobile messaging space is that it's such a buoyant sector for acquisitions. [Ed note: Speak of the devil and he shall surely arrive.] On Monday, OZ Communications Inc. grabbed $34 million in funding for its mobile messaging play. (See OZ Locks Down $34M.)

— Dan Jones, Site Editor, Unstrung

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