August 1, 2016

Verizon Acquires Fleetmatics for $2.4 billion, Strengthens B2B Telematics Offerings

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Verizon is having a busy summer.

Less than a week after buying Yahoo for over $4 billion, the telecommunications giant announced today the $2.4 billion acquisition of Fleetmatics, a SaaS provider for fleet management, mobile workforces, and GPS technology.

The Fleetmatics deal arrives only a month after Verizon purchased Telogis, another telematics provider, for an undisclosed amount.

“Verizon and Fleetmatics share a vision that the SaaS-based fleet management solution market is extraordinarily large, lightly penetrated, global, and fragmented, which can best be attacked with a world-class product offering and the largest distribution channel in the industry,” said Jim Chavers, chairman and CEO of Fleetmatics.

Understanding Telematics

Telematics is the combination of the words telecommunications and informatics. This technology enables a company to monitor a vehicle’s location, movement, status, and behavior using a GPS receiver and a GSM device installed in the vehicle.

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Telematic sensors are already being used by enterprises with large mobile workforces. Uber, Lyft, Amazon, and a host of other companies also need telematics to orchestrate their complex ride-sharing and delivery services.

Why does Verizon care?

Verizon already has a telematics division, so buying Telogis and Fleetmatics solidifies the company’s position as a market leader and makes it a top-of-mind option for any company looking for a solution.

Plus, telematics software already uses Verizon’s expansive cellular network for its GPS functionality.

Verizon is also looking for new ways to make money. The company’s second quarter earning report in June underlined declines in Verizon’s legacy business as well as on the consumer side.

The acquisition of Yahoo was fueled largely by the 600 million people who use the platform on mobile and the potential an audience of that size holds for advertisers.   

It’s not difficult to see how investing heavily in telematics will help Verizon expand its empire to both high-growth companies that rely on mobile workforces and enterprises that run on fleet management.

Verizon Telematics CEO Andrés Irlando mentioned Fleetmatics’ roster of small and medium-sized businesses in his statement about the purchase, so the strategy seems clear. Verizon understands that mobile holds the most potential for innovation in the foreseeable future, and they’re positioning themselves in as many sections of the mobile world as possible.

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“The powerful combination of products and services, software platforms, robust customer bases, domain expertise and experience, and talented and passionate teams among Fleetmatics, the recently-acquired Telogis, and Verizon Telematics will position the combined companies to become a leading provider of fleet and mobile workforce management solutions globally,” said Irlando

As on-demand services like food delivery, ride-sharing, and one hour shipping become more ingrained in the daily lives of consumers, businesses will need a logistical partner that can coordinate the myriad of activities taking place at any given moment.

Although telematics may not command a constant presence in the tech news cycle, it is a substantial market. Fleetmatics boasts over 37,000 customers, 737,000 subscribers, and 1,200 employees.

The purchase is scheduled to close in the fourth quarter of 2016.