Verizon eyes automotive technology market, could spur other deals

Tue Aug 9, 2016 2:50pm EDT
 
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By Malathi Nayak

NEW YORK Aug 9 (Reuters) - Verizon Communications Inc's recent purchases of two vehicle tracking firms could spark more deals as the No. 1 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 $4.8 billion, 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 Plc for $2.4 billion.

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 Corp .

The fleet and mobile workforce management business connects fleet vehicles to the wireless network and collects data, like driver behavior, 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 and software management company Movimento, she added.

Rival AT&T has its own fleet management business and could look into buying fleet tracking firms such as Teletrac Navman, Omnitracs, Geotab and Zonar, analysts said.

Verizon, Argus, Movimento, AT&T, Omnitracs and Zonar Systems declined to comment. Teletrac Navman and Geotab could not be immediately reached for comment.   Continued...