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Case Study

Background

Velocix is a leading provider of Content Delivery Network (CDN) solutions for communication service providers. The company’s customers include several of the world’s largest Tier 1 service providers, including Liberty Global, Vodafone, Telefonica, Telus, T-Mobile, and more. Customers around the globe rely on Velocix to deliver millions of personalized content streams every day. Velocix was first acquired by Alcatel-Lucent in 2009. The acquisition brought CDN infrastructure solutions that complemented Alcatel-Lucent’s existing technology and business initiatives. In 2016, Alcatel-Lucent was acquired by Nokia and the IP video business unit (Velocix) was transferred to Nokia as part of the acquisition.

The Decision to Divest

Nokia recognized that market drivers such as 5G, higher definition video, multiscreen, and time shift end-user viewing preferences require innovation in CDN technology over the long-term. This requires investment, focus, and sustained commitment to the Video space. Nokia evaluated several options and decided that a perpetual specialized owner such as Volaris, with strong financial stability and investment potential, was the best owner and long-term custodian of this technology, whilst enabling Nokia to stay involved as a joint owner and sale channel.

The new partnership with Volaris enables Velocix to invest for growth through innovation and market coverage. Velocix will learn Volaris best practices, which will enable us to scale profitably, while remaining independent. This will allow Velocix to make the best decisions for our customers and markets.

– Paul Larbey, Director, Velocix

3 Reasons Velocix Chose Volaris

Buy and Hold Forever = Long Term Decision Making

As a "buy and hold forever" acquirer, Volaris would never resell the business to a competitor. Nokia believed this notion would resonate with their customers as it would offer stability and allay concerns of the company "disappearing."

Customer Protection

The Velocix customers are still customers of the larger Nokia business. Therefore, Nokia needed to feel confident that these customer relationships would continue to be protected following the acquisition. To ensure no disruption to customers, Volaris committed to ensuring service level agreements would be met.

An Efficient & Flexible Process

As seasoned acquirers of vertical market software businesses, Volaris' M&A knowledge has been sharpened through numerous transactions with corporate entities. With experience, comes efficiency, speed, and certainty to close. This capability was crucial for Nokia to create the most flexible deal structure.

Growth for the Future

As part of the acquisition, Velocix has become a standalone business within the Volaris Communications & Media Portfolio. Over the next year, Velocix aims to develop processes that will allow them to run the business more autonomously. Plans are also underway to expand their business by tapping into the ecosystem of customers within the Comms & Media portfolio. Velocix was excited to learn of previous carve-outs Volaris had executed and heard their inorganic success stories. The opportunity to expand the Velocix portfolio via acquisition resonated with the Velocix management team. Velocix will also leverage the expertise of the Volaris Communications & Media portfolio and their existing customer base of hundreds of service provider customers. At Volaris, Velocix will stay true to its original goals as a company: to enable big changes in the video market, to personalize media delivery and enable a compelling entertainment experience for consumers on every screen. 

Keep Reading

Divestments of non-core businesses are a focus of Volaris Group.

Since 2017, the Volaris Comms & Media Portfolio has partnered with three businesses to execute corporate carve-outs, including Nokia.

Learn the other stories below. 

 

Velocix was acquired by Volaris Group in 2019.