Verizon aims to pump up its IoT presence with fleet management deal

Plans to pay $2.4 billion for Dublin-based company, following in Orange's footsteps this year in telematics arena.

Verizon Communications plans to buy cloud-computing-focused fleet management firm Fleetmatics Group, in a deal that will pump up the telecom carrier's internet of things portfolio.

The US$2.4 billion deal for the Dublin-based fleet management vendor will give Verizon a toehold in the GPS vehicle-tracking and connected cars markets. Fleetmatics, with U.S. headquarters in Waltham, Massachusetts, has about 37,000 customers and 737,000 subscribed vehicles worldwide.

The deal, announced Monday, "underlines Verizon's commitment to the IoT space," Dan Bieler, a digital business analyst with Forrester Research, said by email. "In terms of IoT revenues, this deal helps to improve Verizon's positioning."

Still, the deal will provide a tiny bump for Verizon's bottom line, at least in the short term, Bieler added. "Keep in mind that Fleetmatics Group has revenues of about $280 million, whilst Verizon has revenues of about $130 billion," he said.

Bieler declined to comment on the size of the deal but noted the price isn't the main concern. "I can state that the acquisition is the easy part, successful integration is much harder because it is about business process support," he said.

Verizon has had to buy a handful of companies, including nPhase, Hughes Telematics, and Telogis, to compete in telematics, added Eric Goodness, an IoT and mobile analyst at Gartner.

"Automotive is a big part of the emerging IoT," Goodness said by email. "Verizon was an early leader and lost a bit of ground to other providers."

"Fleet management is a solid platform for communications providers "to build additional value, beyond connectivity, for automakers, third-party logistics companies and the like," he added. "Autos represent the raison d’etre of IoT -- things with wheels, always connected, all the time interacting with other things with wheels and their environment."

Verizon isn't the first large communications company to get into the fleet management business this year. In April, Orange Business Services announced plans to buy Ocean, a fleet management vendor and fellow French company.

Fleetmatics offers web- and GPS-based vehicle tracking services, including information about vehicle location, fuel usage, speed, and mileage. The tracking services are designed to help customers reduce fleet operating costs.

Verizon Telematics will use the acquisition to become "a leading provider of fleet and mobile workforce management" products, Andrés Irlando, CEO of Verizon Telematics, said in a press release.

Verizon Telematics operates in more than 40 markets worldwide and offers mobile, software, and hardware products aimed at the connected-vehicle industry.

The deal, expected to close in the fourth quarter, must still be approved by Fleetmatics' shareholders and the Irish High Court.

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