Grizzly Research is short shares of Sinch AB (STO:SINCH).
- Sinch AB (STO: SINCH) is a Sweden-based company that operates as a Communications Platform as a Service (CPaaS) provider that enables businesses to communicate with customers via SMS, rich messaging (RCS/WhatsApp), voice, video, email, and verification services through APIs.
- Sinch acquired Inteliquent, which we believe to be a key financial driver for Sinch. Our analysis reveals Inteliquent to be the single biggest enabler of scam and robocalls in the Western Hemisphere, with the business facing a regulatory scrutiny.
- While investors seem mostly unaware about the scam call issues related to Inteliquent, regulators around the world are not. The Anti-Robocall Task Force led by the Attorney Generals of Indiana, North Carolina, and Ohio found in December 2025 that Inteliquent is responsible for almost half the robocalls in the US. We see regulators closing in on the company, which we expect will materially hurt Sinch’s financials. None of this has been disclosed to investors yet.
- We consulted with experts and found high-quality research the scam reporting community has done. Sinch and its subsidiaries were consistently exposed as the worst industry players and key enablers of the scam call industry.
- Our analysis of Sinch’s subsidiaries from a consumer perspective indicates that they are among the most frequently cited for enabling scam and robocalls. In particular, consumers seem most upset about Sinch for the lack of enforcement against fraudulent callers.
- Sinch’s system involves layers between itself and the fraudulent users of its service. This does not change the fact that it is within Sinch’s power and responsibility to stop the abuse.
- We believe Sinch’s compliance team is inadequate both in scale and effectiveness given the volume of scam and robocalls its platform can enable, especially relative to peer operators. This aligns with the feedback we have gotten from consumers and industry experts who complain about Sinch’s enforcement against fraudsters.
- We are highly concerned that Sinch may be consciously turning a blind eye to fraudulent users of its services. While grey market business often appears financially attractive, it introduces significant risks that investors may underappreciate.
- Scam calls are not jokes but a serious matter that destroys many lives. The victims of these scams are usually vulnerable, often elderly people, which makes the scams in our opinion particularly disgusting and regulatory protection even more important.
Introduction
Sinch AB (formerly CLX Communications AB) is a Sweden-based provider of cloud communication services, operating as a CPaaS (Communication Platform as a Service). The company generates revenue through three segments:
- API Platform: Offers messaging, email, voice, and verification APIs for technical teams, including management tools and integration with major cloud solutions like Salesforce and Microsoft Teams.
- Applications: Designed for business users such as marketing and customer success teams, removing the need for in-house or external developers.
- Network Connectivity: Provides telecom operators and CSPs with services to connect to Sinch’s global network and manage voice and messaging traffic efficiently.
The company grew through a roll-up strategy, completing all their acquisitions by the end of 2021.
Though the company has been making acquisitions since the mid 2010’s, most of these acquisitions have been smaller in acquisition price and bolt on.
Source: Sinch Feb 2021 Investor Presentation
The company rebranded as Sinch AB in early 2019, saying that the company “has used the Sinch trading name for its real-time voice and video products since the acquisition of Sinch AB in December 2016”, highlighting the growing reliance of the API segment, then called real-time voice and video products.
Apparently, Sinch needed a lifeline, as CLX had lent SEK 1.5 million to Sinch through a convertible loan for working capital. Additionally, the SEK 130 million acquisition enterprise value seems cheap compared to the SEK900 million in revenue Sinch generated in 2016.
Inteliquent – Sinch’s Golden Goose
Continuing its acquisition strategy, the company completed its largest purchase with Inteliquent in early 2021 for a total consideration of $1.14 billion USD. Inteliquent says they are the largest independent voice communications provider in the United States. We believe this was the transformative acquisition that helped boost Sinch’s financial results in the following years.
Source: Sinch Feb 2021 Investor Presentation
The acquisition took the better part of 2021, with Sinch announcing the acquisition on February 17th, 2021, and finally closing the deal in December 2021.
Underscoring the importance of this acquisition the company stated that the Inteliquent acquisition
“made Sinch the largest independent voice network in the United States. Inteliquent is one of the major backbones of any voice calling provider in the US and is also trusted by the major US mobile operators to power their peer-to-peer calling.”
Inteliquent and its subsidiaries Onvoy, and Neutral Tandem, are not traditional cell phone carriers. Rather than selling phone plans directly to consumers, the company primarily operates in the wholesale communications market, supplying the underlying network connectivity that carriers, cloud-communications platforms, and enterprises use to deliver phone calls and text messages. Its customers include wireless carriers, cable operators, VoIP providers, and large technology platforms that need reliable voice connectivity.
The second way Inteliquent makes money is by selling phone numbers in bulk to other traditional cellphone carriers. This is done by Inteliquent acquiring blocks of phone numbers from numbering authorities. Inteliquent maintains inventory covering every state and county in the United States, enabling the company to provide numbers to customers who need specific area code phone numbers.
Based on our financial analysis we believe that Inteliquent is Sinch’s golden goose. While Sinch does not disclose revenue by subsidiary, we can see that Sinch’s financials show that total revenue increased significantly following the Inteliquent acquisition, from SEK 16.17 billion to SEK 27.72 billion. Of the SEK 11.5 billion increase, North America accounted for SEK 8.8 billion, or approximately 76% of the total growth.
Compiled from Company Sources
According to Sinch’s acquisition news release, they stated that
“In the twelve months ended December 31, 2020, Inteliquent recorded revenues of USD 533 million, Gross Profit of USD 256 million, EBITDA of USD 135 million, and capex of 32 million. Adjusted for a Covid-related uplift that is considered to be temporary, revenues are estimated to have been around USD 499 million, Gross Profit around USD 233 million, and adjusted EBITDA around USD 112 million.”
Assuming no growth in Inteliquent’s business over two full fiscal years, $553 million USD equates to approximately SEK 4.9 billion, this would represent about 55% of the SEK 8.8 billion increase in North American revenue. Once again, assuming 0 growth in 2 full years.
Looking at the segmented revenue, Americas revenue more than doubled from SEK 6 billion to SEK 14.8b in 2022, the first year Inteliquent’s financials were fully consolidated in Sinch’s financial results.
Compiled from Company Sources
As a result of the acquisition, Americas revenue segment jumped from roughly 37% of total revenues to 53% of total revenues immediately after the Inteliquent acquisition and has continued to grow to over 62% of Sinch’s total revenues.
Additionally, the Americas revenue growth has generally outpaced all other geographic segments, suggesting it to be the company’s most important revenue segment.
Compiled from Company SourcesCompiled from Company Sources
Read the full report here by Grizzly Research
