Bango, the U.K.-based mobile payments company that provides tech to enable consumers to charge app store purchases directly to their phone bill, has acquired the U.S.-based Carrier Billing Service BilltoMobile from Danal Inc.
The purchase price is $3.5 million, comprising of $3 million in cash, to be paid immediately, and $500,000 in newly-issued Bango shares at a price of 60 pence per share.
Bango is talking up the acquisition as means for the company to strengthen its product offering across the pond, specifically citing BilltoMobile’s relationship with all four U.S. mobile carriers, which will enable U.S. app stores and major U.S.-based merchants to utilise its ‘Bango Boost’ technology, which provide richer customer data and analytics.
The other interesting aspect of the deal is that BilltoMobile is said to be loss-making for Danal Inc., with an annual loss of approximately $850,000. However, Bango management expects to operate the BilltoMobile services “within the current Bango operational cost base and platform,” and says the acquisition is expected to make a significant contribution to the performance of Bango in 2016 and beyond, in typical publicly-listed company speak.
To put it more simply, Carrier Billing margins are thin and flimsy, a bit like individual sheets of filo pastry (according to my colleague Ingrid Lunden), so companies like Bango need economies of scale to remain viable. The purchase of BilltoMobile’s customer base and carrier relationships — the acquisition doesn’t include any staff, equipment or premises, says a statement issued to the markets — should help in that regard.
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