With the telecom market being increasingly saturated, telecom companies are looking for other recurring sources of revenues to boost their bottom lines.
Analysts opine that Verizon Communications’ recent acquisition of two vehicle tracking firms could lead to and/or spark more deals since Verizon and AT&T see fleet management as a potential source of growth.
With the wireless marking becoming increasingly saturated, telecom companies are starting to look beyond their main domain of expertise so as to extract more value from their existing infrastructure.
Case in point: last month dove into digital media and advertising after it bought Yahoo for $4.8 billion. Similarly Verizon has also acquired Telogis, a privately held connected-vehicle technology firm and has disclosed that it would like to buy Fleetmatics Group Plc for $2.4 billion.
According to Richard McBee, CEO of Mitel Networks Corp, a Canadian communication technology company, telecom providers are moving towards acquiring “eyeballs or a fleet of people” which can use apps built on top of their wireless networks.
The mobile workforce management business connects a fleet of vehicles to existing wireless networks and collects a range of data including, driver behaviour, distances covered, etc. to manage workers and the vehicles.
Significantly this business is a subscription based revenue model which companies such as Verizon are looking to use for clients such as large logistics companies and for its local delivery services.
As per Susan Beardslee, an analyst with ABI Research, having acquired Telogis and Fleetmatics, Verizon could be on the hunt for a security or software technology firm so as to pair its data-centric automotive technology business. She went on to add that potential targets include Argus, an Israel based cyber security firm and Movimento, a software management company.
When requested to respond to requests for comment, Verizon, Argus and Movimento have all declined comment.
Fleet management businesses may also get a boost from a recent federal regulation that mandates that companies digitally record driver work hours with electronic devices, said analysts.
“It will be interesting to see how they leverage up here in coming years. But I wouldn’t expect (Fleetmatics) to be the last of their deals,” said Angelo Zino, an analyst at S&P Capital IQ.
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