Transport: More deals to follow Fleetmatics
Verizon Communications' recent purchases of two vehicle tracking firms could spark more deals as the number one US wireless provider and rival AT&T see fleet management as a source of growth, analysts said.
Faced with a saturated wireless market, several telecom companies are looking beyond their main phone business for ways to extract more value from existing networks. Just last month, Verizon bought Yahoo for $4.8bn, diving into digital media and advertising.
But Verizon also recently acquired privately held connected-vehicle technology firm Telogis for an undisclosed sum and said it would buy GPS vehicle tracking company Fleetmatics Group for $2.4bn.
Telecom providers are moving towards acquiring "eyeballs or a fleet of people" that can use applications built on top of the wireless network, said Richard McBee, chief executive officer of Canadian communications technology company Mitel Networks.
The fleet and mobile workforce management business connects fleet vehicles to the wireless network and collects data, like driver behaviour, to manage vehicles and workers. The business delivers a source of recurring subscription-based revenue from clients such as large logistics companies and local delivery services.
After buying Fleetmatics and Telogis, Verizon could be on the lookout for a security or software technology firm to pair with its data-heavy automotive technology business, Susan Beardslee, analyst at ABI Research, said. Potential targets could be Israel-based cyber security firm Argus, she added.