Commercial fleet telematics continues to be a hot vertical market in the M2M arena with a lot of M&A activities during the past two to three years. However, the pace of consolidation has quickened in 2013 with private equity playing an increasingly pivotal role in consolidating the sector.
In August, Vector Capital recently sold Teletrac (formerly TrafficMaster) to Danaher Corp. for an undisclosed sum. Vector acquired Teletrac in August 2010 and claims to have “transformed the business” in around three years. Danaher Corp is already active in the commercial fleet telematics market and owns Navman Wireless.
Later in August, Qualcomm announced that it was selling Omnitracs to Vista Equity for $800 million in cash. Omnitracs offers high-end solutions with hardware costing up to $2,000. With its feature-packed system it still dominates the long-haul fleet markets but this market is pretty much saturated with very little growth potential. Currently, the fastest growing part the vehicle tracking market is the regional and local commercial vehicle sector. However, Omnitracs has struggled to gain a foothold in this market in the face of numerous competitors offering lower-cost solutions.
Of great interest to the industry will be Vista Equity’s strategic intentions for Omnitracs and how this will impact on other players during the next few years. Vista’s core competence is investing in software, data and technology-enabled businesses and so the acquisition appears to be a good fit for both companies. With $7 billion under management, the company has the deep pockets to enable Omnitracs to consolidate its dominant position in the long-haul market and, more importantly, enable it to leverage its expertise in new market sectors. Vista could look to make additional acquisitions in the fleet-tracking industry – possibly by picking up a US company focused on the local commercial vehicle market.
Another private equity group, Franscisco Partners is behind the creation of UK-based Masternaut which is now one of the largest commercial telematics service providers in Europe. It also owns US-based tracking company Nextel.
The telematics services providers themselves are also in acquisition mode. Also in August, TomTom acquired Barcelona-based Coordina, a key player in the Spanish telematics market, which will boost its active installed base of subscribers to more than 300,000 vehicles. And wireless carriers such as Verizon and Orange are already involved with many of them having introduced fleet management solutions.
The commercial telematics industry has long been a very fragmented market but there are now firm signs that this is changing and ABI Research expects to see several players breaking the 500,000 subscriber unit barrier over the next few months and years.