More telecom companies will follow in the footsteps of Verizon Communications (VZ) by making acquisitions targeting the Internet of Things in 2017, forecasts market research firm Analysys Mason.
“Telecom operators will be under pressure to grow IoT revenues faster, possibly through acquisitions,” said Analysys Mason in its 2017-outlook research report.Verizon aims to sell software and services, not just access to its communications network.
Verizon and rival AT&T (T) are targeting the Internet of Things, including web-connected cars and telematics services, as a growth market. IoT also encompasses advanced robotics, telemedicine, automated factories, smart cities and the development of massive sensor networks in such fields as agriculture.
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“Verizon was one of the few operators to make bold moves in 2016, spending over $3 billion on its acquisitions of Fleetmatics, Telogis and some other smaller firms,” the report said. “Other operators may follow Verizon’s lead in 2017.”
Verizon in August acquired Fleetmatics Group for $2.4 billion. Fleetmatics sells cloud-based commercial fleet and mobile workforce management products.
Verizon stock finished trading up 1.2% to 52.91 on the stock market today, at a three-month high near 53. Verizon stock, which is trading well above its 50-day moving average and last week moved above its 200-day average, has a buy point of 56.95.
Verizon in September acquired Sensity Systems, a provider of smart city products.
Verizon’s IoT revenue in Q3, excluding Fleetmatics, increased 24% from Q3 2015, to $217 million. “Revenue from IoT accounts for less than 1% of most operators’ total revenue. It will take until 2025 for IoT to exceed 5% of operators’ total revenue,” forecasts Analysys Mason.
In other IoT deals in 2016, Qualcomm (QCOM) purchased NXP Semiconductor, targeting autonomous cars, and Japan-based SoftBank acquired wireless chip designer ARM Holdings.
Cisco Systems (CSCO) bought Jasper in March for $1.4 billion, gaining a cloud-based IoT platform.
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