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09
Apr
2013

As Octo Telematics Sale Looms, who are the Contenders?

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There are a handful of successful commercial telematics service providers in Europe (in no particular order: Masternaut, Trimble, MiX Telematics, FleetMatics and Daimler FleetBoard) which have all developed respectable commercial telematics businesses, and there are a host of other players which are addressing the market with varying degrees of success.

In the European commercial telematics market players’ precise focus may vary, but most successful players go beyond the provision of basic tracking services - which has become something of a commoditised business - to integrated and highly advanced fleet-management services, driven by portals which have often been adapted significantly for the customer.

Within this commercial telematics ecosystem, the Italian player Octo Telematics is something of an anomaly in that it offers both consumer telematics service and insurance telematics. Though the company is not unique in doing so, it has reached a level in the UBI (usage based insurance) market which deserves recognition as a European market leader in this area (Octo Telematics’ 2012 revenues are believed to be of the order of  €100 million).

Because of this, recent announcements that the company is up for sale open up a wide range of possibilities.

So what are the options?

Number one, acquisition by a rival. Consolidation is not new in the commercial telematics market. The acquisition of PeopleNet by Trimble and of Cybit by Masternaut strengthened both these players. However what is significant about the latter is that it is now owned by the private equity group Francisco Partners.

Which brings us to option two: acquisition by one or more VCs. Since Amadeus Capital Partners and Rothschild together hold 25 percent of Octo Telematics already, they could be tempted to increase their ownership, on the basis that the company is cashflow positive and has healthy recurring revenues.

The third option, of course, is the acquisition by a telecoms company or MNO. Across the pond Verizon paid $612 million for Hughes Telematics, a telematics service provider of similar size. That might make sense as, with penetration rates exceeding 100% across Europe for human subscribers, M2M is becoming increasingly attractive. And within M2M, telematics seems to be the most developed segment.

Go on Vodafone. I dare you.