O2 to buy Israel's Jajah for $200 mln -report
Israeli start-up Jajah, which allows users to make international phone calls via the Internet, will be sold to Telefonica's (TEF.MC) mobile phone unit O2 this week, TheMarker financial news website said on Sunday. — Jajah officials could not immediately be reached for comment.
Context & Ripple Effects
O2 enters this deal from a position of smartphone dependence: it accepted Apple's demand for a share of iPhone call revenue back in 2007, missed its own UK iPhone sales target in early 2008, and spent July 2009 securing UK exclusivity for the Palm Pre alongside the iPhone. International voice is still the margin engine behind those handset subsidies.
Now TheMarker reports — and the report remains unconfirmed, with Jajah officials unreachable — that Telefonica's O2 will buy the Israeli internet-calling start-up for around $200 million this week. The strategic logic writes itself: instead of letting VoIP services siphon off high-margin international calls, the carrier would own the technology doing the siphoning.
First-order effects
- O2 would gain in-house VoIP routing for international traffic, letting it defend call-margin economics against over-the-top internet-calling services rather than ceding those minutes entirely.
- Jajah's founders and backers get a ~$200 million exit if the reported deal closes; until then the price and even the transaction remain rumor-level.
Second-order effects
- Rival European mobile operators facing the same international-voice erosion now have a template to copy — acquire the VoIP capability rather than discount against it — which puts a premium on the small pool of independent internet-calling startups.
- Israeli VoIP and telephony startups gain a validated exit path to carriers, likely drawing more carrier corporate development attention to that market segment.
Third-order effects
- If carrier acquisitions of VoIP players become the pattern, internet calling gets absorbed into operator billing and bundles rather than remaining a standalone disruptive category — voice shifting from a metered service to a software feature inside mobile plans.
- The alternative reading — operators buying disruptors to slow them down — sets up the classic antitrust-and-innovation question regulators apply when incumbent carriers swallow cheaper calling technology.
The trend: European carriers are moving to buy internet-calling technology outright rather than watch over-the-top VoIP erode their international voice margins.