(Bloomberg) -- Belgian telecommunications operator Proximus Group has agreed to buy a majority stake in Indian cloud communication service provider Route Mobile Ltd. for 59.22 billion rupees ($721 million) to gain a foothold into high-growth markets.

The Brussels-based company will buy about 58% stake in Route Mobile at 1,626.40 rupees ($19.8) a share through its unit Proximus Opal, and will make a tender offer for an additional 26% stake at the same price to comply with Indian rules. Some of the founding shareholders of Route Mobile will reinvest $336 million in Proximus Opal for as much as 14.5% stake, according to a statement to stock exchanges.

Route Mobile fell as much as 9.3% in Mumbai, the most since May 2022, reversing early gains of as much as 8.3%. At the stock’s Friday close of 1,625.35 rupees, it had surged nearly five times from its initial share sale price in September 2020.

The acquisition creates the third-largest communications platform-as-a-service (CPaaS) company globally by messaging volumes, Proximus said. The deal would give it access to newer, high-growth markets including India, Africa and Latin America and also helps “capture value from the ongoing – generative AI-based – revolutions in customer engagement.”

Route Mobile CEO Rajdip Gupta will continue in his current role, and will also lead the CPaaS activities of Proximus Group. 

What Bloomberg Intelligence Says

Proximus’ acquisition of a majority stake in Indian Route Mobile is strategically sound as it scales up the high growth TeleSign business, which is 8% of sales. The acquisition may result in 0.2 times increase in net leverage to 1.8 times, together with consolidation.

- Erhan Gurses, Bloomberg Intelligence telecoms analyst

(Updates share move and adds comment from BI analyst)

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