Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's investor update conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today, Thursday, the 10th of October 2019. I would now like to hand the conference over to your speaker today, Thomas Heath. Please go ahead.
Thank you, operator. Warmly welcome everyone to this investor update with Sinch, where we present the acquisition of TWW in Brazil. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. With me in the room today is our CFO, Roshan Saldanha, and our CEO, Oscar Werner. With those introductory remarks, I'll hand the word over to Oscar.
Thank you. We are very happy to announce today the acquisition of TWW, one of the leading messaging providers in Brazil, and Brazil being the world's fifth largest country by population and GDP, it's a very interesting market for us. With that said, let's move on to slide two. Here we see a summary that we have shown a couple of times on Sinch. To orient this acquisition a little bit, you can see in the top right-hand corner, 30 plus offices as we significantly strengthen our presence in Brazil here. On the 30 billion engagements, we're adding around about 10, a little bit more than 10% in number of transactions. 30 billion transactions goes up with around about 10%. One line below, serving eight out of 10 of the largest U.S. tech companies. Brazil is a very interesting market to our biggest customers.
We're strengthening our offering to our biggest customers. On the next line, a growing global multi-billion dollar CPaaS market. The Brazilian market has grown fast and at a rapid pace, and we're adding some 3,000 enterprises as customers via this transaction. We think that's a very interesting addition to our current strong customer base. On the last slide, profitable since our foundation in 2008. This adds to our profit in a significant and accretive way. Also the gross profit growth, it is a good way for us to continue to grow in a profitable and accretive manner. This is in line with our current and future strategy. Next slide, please. Slide three. Here we have where the CPaaS market is relevant. It's relevant in the revenue generation side, in the service enablement side, and the customer care side.
Revenue generation, it's a broad category of customers or enterprises using messaging to add revenues or reduce churn or other forms of revenue generation measures. It's also service enablement. It can be one-time passwords, verification, number masking, mobile boarding processes, et cetera. I'm sure that all of you have received or used messaging services for that type of use cases. It's also becoming very large in customer care, where people or enterprises are moving their call center or customer care volumes from call centers over to messaging, since it is more effective for the user, it's the preferred channel for the user, and it's also easier to automate and therefore you can significantly lower cost. This transaction is playing in all of those different categories. Next slide, please. On a growth, we put up our own playbook, from our own perspective on profitable growth.
We're looking at the market from a 10,000 or maybe 100,000 feet perspective and seeing we are on the connectivity layer. That is what Sinch has been doing traditionally, and that is connecting operators and other communication channels, and providing those via one single API to the world's enterprises. It's the additional software value-added services in the software as a service layers, where we are empowering businesses to leverage rich and conversational messaging by increasing our software value add, and then being able to charge more per transaction. This acquisition is primarily targeting the connectivity layer. We get a strong connectivity layer in one of the world's largest countries, Brazil. It's strengthening our offering in that layer as another contract to the myElefant acquisition, which was primarily targeting adding software as a service components to be able to charge more per transaction.
This is a very good transaction in the connectivity layer, with high profits and strengthening our offering to our big customers in that layer. Next slide, please. We are leveraging M&A to meet our strategic objectives. Looking at our market, we have a very attractive market. The messaging market alone is SEK 17 billion, and it's a highly fragmented market, and it's a highly profitable market as well. We're using both organic growth and M&A to meet the strategic objectives that we have. This is on the scale and profitability side or the connectivity side. The key rationales for this is mainly on the bottom part of this, acquiring complete end customer relations. This is around about 3,000 enterprise relations in Brazil. We're adding direct operator connections in new markets.
We're adding all the operator connections in Brazil directly and not via middleman, which is very powerful for us. We're expecting synergies by transferring traffic to Sinch's technology platforms. You have the enterprise value is EBITDA accretive. Acquiring profit at the lower valuation than we have is obviously attractive. That's one of the striking things with this market. There's a lot of companies out there making very good profits, but that doesn't have the global scale and the outlook that we have, and therefore they have a lower valuation. That's the yellow scale and profitability part, that's the main rationale for this transaction. As you know, as we communicated in the myElefant case, we're also using M&A for the technology go-to-market objective, but that's not the primary reason for this acquisition. Next slide, please. Let's move on to slide six.
This is the acquisitions we have made in the past year. You see that the technology go-to-market, we made a set of acquisitions there, where [Beak] and myElefant being the last ones. On the scale and profitability side, we've made a set of acquisitions there as well, where Unwire, it was quite some quarters ago, and then TWW in Brazil fits into that category as well. We're continuing on the strategy we set out, and when we find good acquisitions, we are making them since we think they're very good for our shareholders. Next slide, please. With that, I would like to hand over to Roshan.
Thank you, Oscar. Just briefly describing the rationale for this transaction that we're doing in Brazil, very excited about acquiring TWW. TWW was founded 23 years ago, exactly today. That's an interesting bit of information as well. It's today the third largest SMS connectivity provider in Brazil, bringing with it a team of 37 people, and 3,000 large enterprise customers, across all industries. This is, of course, as Oscar said, a scale and profitability type of acquisition for us. We will add scale, we will add local operator connections, and we will add strong customer relationships. TWW is a profitable company, generating an EBITDA in 2018, adjusted EBITDA of BRL 17.5 million or SEK 43 million. Our enterprise value in this transaction, or the enterprise value of TWW in this transaction is BRL 180.75, which at today's exchange rate converts to SEK 439 million.
We're expecting to close this transaction in the second half of October 2019. From an integration perspective, we will utilize TWW's direct operator connections to terminate Sinch's global messaging traffic. We will also be, over time, integrating our global messaging platform with that of TWW. Of course, we will be sharing our ways of working and best practices across both companies, bringing Sinch's products to TWW's customers wherever possible. With that, I would like to hand back over to Oscar.
Sorry, I was on mute. Let's move on to the next slide. Slide eight, please. The size of Brazil and the Brazilian market and the growth of it is one of the main reasons. Brazil being the world's fifth largest country by population, GDP, and geographical size. It's got a 210 million population, and it's got a rapid increase in smartphone penetration and mobile internet usage. We're seeing both a large market, and we're seeing strong growth in the market now and going forward. We're seeing, given that we're serving the world's largest enterprises, this type of large growing market is obviously very interesting to our largest customers. TWW, as such, has got 3,000 customers, net 19% customer approval, so strong quality provider, which we like. 3.4 billion messages sent in 2018, so a little bit more than 10% of our volume.
To know it's been a Sinch partner since 2012. We have used TWW as a delivery partner in Brazil for several years. We know this company, and we know their quality very well. This is a known entity to us, both in terms of personnel and processes and quality of operations. Thank you. Let's move on to the next slide. We have seen a rising interest for Brazil over the last two years from our global customers. We've seen a 10x increase in our own traffic to Brazil, which has been obviously a key reason for our own increased interest in the market. Since July 2018 to June 2019, we've seen our own traffic increase by a factor of 10.
Given that Brazil is now becoming a large market, the acquisition of TWW secures the highest possible quality through direct end-to-end connectivity. It's a known fact in our market that when traffic is high for demanding customers, you want to own the entire chain from the customer all the way down to the operator in order to be able to control and improve quality gradually. It is hard when you have a middleman in between and when you're dependent on some other country. Given that we see the traffic in this region being big and we see it growing, we think it's a very good move in order to integrate that into our global platform. Next slide, please, slide 10. This is adding to our tier 1 global connectivity network.
We have over 300 direct mobile operator connections. TWW adds direct connections to all mobile operators in Brazil. This is the base of our offering. It's something that is very expensive for other people to build. It takes a long time, and many times operators don't allow you in. Adding direct operator connectivity in big market is a core asset to us, and that's a core reason for this deal. As I mentioned before, it gives you end-to-end control over all messaging, so you can increase the quality. We have enhanced security. We can have security all across the network. Speed and throughput, enable to deliver high speed and high throughput to our customers. Improve redundancy to control the entire redundancy chain and make sure that nothing is going down because we control the entire chain. Broader feature support.
Basically not having to deal with the fitting a square peg in a round hole problem when you control the entire network from cradle to grave, it's much easier to give total feature support. On this slide, you also see the operators that we're adding. Next slide. I will hand over to Roshan again to cover slide 11, financial targets.
Thank you, Oscar. Again, just to remind us, Sinch's financial targets continue to remain and are unchanged from before. Adjusted EBITDA per share to grow 20% per year and net debt over EBITDA to be over time less than 2.5 times. This transaction impacts net debt over adjusted EBITDA by around 0.8 and pro forma net debt over adjusted EBITDA will be 2.2X following the acquisitions of both myElefant and TWW. With that, I would like to hand back over to Oscar for concluding remarks.
Thank you. That was all the information we wanted to provide today. To me, the rationale is very simple. It's a very solid company that we've known for a long time in a very large market, where they have large volume for our biggest customers. In addition to that, it also adds to one of our core assets, the operating network. This is a bread-and-butter, very solid acquisition from our side, and we're very excited to work together with the TWW team going forward. Thank you. With that, I will hand over back to Thomas.
Thank you very much, Oscar. With that, we'll open up for any questions from the conference call. Operator, please.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question. The first question comes from the line of Daniel Juberg. Please go ahead.
Thank you very much, and congratulations on the interesting acquisition. First question would be to Roshan regarding the integration and I guess that you will migrate TWW to your own Nova platform. Can you tell us about how much cost this will be, if it's non-recurring and how it will pan out? That's my first question.
Yeah, sure. We will be migrating the traffic over to our own platform over time, and do that in a smooth way, while at the same time maintaining customer experience for the customers of TWW. We estimate the total integration costs to amount to around SEK 30 million over the next 18 months or so.
Perfect. Another question from me. If you look at this market, you've obviously been working with TWW since 2012 and if you should have done more of organic, i.e., done these connections with operators yourselves and then start to build an organic presence, can you talk a little bit about why you choose to do this instead of that strategy?
Oscar, do you want to take that?
Yeah, I can take that question. Given that the messaging market is mature, it is very hard to go into these markets organically from scratch. That's due to a couple of factors. One, it's hard to get the actual operating connections from a commercial perspective. They don't let a lot of players in. Number 2, there are volume discounts from the operators. Basically, if you start from scratch, you would not be making any margin or even subsidizing traffic in order to get the revenue. Since the big customers would be at the higher volume tier than you're able to do. If we made the operation access right now, we couldn't sell to our biggest customers from day 1. Number 3 is a time and resource question. It would take a long time both to build the connectivity, build the local team, and to build the volume.
From an ROI perspective, it would take a long time. You have a stretched out period where you're making losses instead of a short period where you obviously pay money for it, but then you get the big impact right away.
Yeah. Also these 18 connect-- sorry.
Yeah. The last question is we have, like you said, our own traffic to this market has connects over the last months. We have a need now to do it. We have a large demand from our biggest customers to do it now. We actually don't have time to go and build it since then we would, I wouldn't say risk them, but it's a key thing that your biggest customers want, and they want it now, then it's hard to wait for a couple of years to deliver it to them.
Yeah. Great answer. May I just ask you, out of these 18 connections or operators that you showed on this slide, how would you say, are most of them closed or is it possible for someone else to add these connections?
I think I can give a shot at answering that. It's a little bit of a mixed picture. The general answer is that there are clear barriers to entry on the operator side in Brazil. We've had a very limited amount of direct connectivity, which has definitely not been sufficient. It's a little varied across the carriers, but this is a clear barrier to entry.
Perfect. I will get back in line.
that is.
Someone else then, yeah.
Yeah. Just to comment on that, it's not always a clear black and white, it's written in a document, this is open or this is closed. It's a relationship game, et cetera. It's not a clear cut answer. In practice, it's hard to get in.
Yeah.
If you will.
I understand. Thank you so much.
There are no more questions at this time. Please continue.
If there are no more questions, we thank all the participants for dialing to today's conference call. We're very excited about the future and hope you keep up with us in upcoming announcements. Thank you very much.
Please continue.
That does conclude our conference for today. Thank you for participating. You may all disconnect.