US company Taqua, which makes a virtual mobile core, has acquired Kineto, which provides voice-over-wifi (VoWifi) software for smartphones, with the aim of creating a complete VoWifi provider. They had already been collaborating extensively, including on Sprint’s wifi calling service.
The two companies provide complementary technologies, with Taqua handling 3GPP functions and Kineto the handset-side functionality, so the acquisition seems pretty natural. “We started working together as two companies a couple of years ago and Sprint was the first joint engagement we had,” Ken Kolderup, CMO of the combined company and previously from Kineto, told Telecoms.com.
“And then we found ourselves in several dozen operator engagements where we always seemed to be matched up with Taqua on the core and us [Kineto] on the client and it always worked out really well. There’s no product overlap and even from a management team perspective we completed each other.”
While the deal is an acquisition of Kineto by Taqua, the similar sizes of the companies, their complementary products and the incorporation of almost all Kineto personnel into the combined venture make it seem more like a merger.
Kolderup insisted there was a degree of inevitability about the move. “We’ve been working with this one mobile group around the world and their head of technology strategy started giving us grief earlier this year, saying ‘I really like what you guys are doing, but why aren’t your boards talking, why don’t you guys get together?’ Now he thinks it was all his idea,” he joked.
Of course for this merger to be a success there needs to be demand for the full VoWifi solution Taqua can now offer. “Our solution is addressing what we believe to be an ongoing problem that’s out there,” said Kolderup. “All the research has shown that somewhere between 10-20% of any carrier’s subscriber population has poor or no coverage at home for voice services. At the same time the vast majority of subscribers in most developed countries have smartphones that are now automatically connecting to a home wifi network, so we are seeing a lot of operator momentum on this.”
It seems that demand for VoWifi comes from two main sources: people who have bad voice coverage at home and MVNOs looking to offer very competitive tariffs on the condition that VoWifi is their primary voice connection. Taqua’s software also deals with the handover from wifi to cellular, but the majority of VoWifi users are likely to complete their call at home.
Kolderup feels the two companies have come together at just the right time too. “The big thing that happened several months back was that Apple announced they were going to support VoWifi with iOS 8,” he said. “That took away one of the final objections we were getting from operators, who typically have 25-50% of their subscribers using iPhones.”
With Apple set to make its big annual mobile announcement next week, it looks like the timing of this merger is pretty ideal.