Telit’s Acquisitions to Reshape Global IoT Module Market

In recent times, Telit has acquired cellular IoT businesses from Thales and Mobilogix. The IoT module market has started consolidating and we expect to see a few more deals in the coming months. In August, we also saw Semtech acquiring Sierra Wireless to offer complete chip-to-cloud solutions to cover the entire IoT value chain. The back-to-back acquisitions by Telit show how it is trying to become an integrated player. With the Mobilogix acquisition, Telit can offer modules, connectivity, security and management platform to design and manufacturing services. It means Telit will act as a one-stop solution provider for its customers. Here, we will try to analyze what these acquisitions mean to Telit and how they will impact the IoT industry.

Telit-Thales deal

Thales is merging its cellular IoT module business into Telit to form a new entity called Telit Cinterion. Thales will own a 25% stake in the newly formed entity and offer SIM technology and security services for IoT modules.

China dominates the global cellular IoT module market by taking more than 55% share. International players are struggling to compete in the operator- and government-driven China IoT module market.

After its deal with Telit, Thales will enjoy less distraction from its module business and will be able to focus on its core business which includes software, security and services. Thales will still continue to provide eSIM services where it is a market leader.

Global Cellular IoT Module Shipments Share by Vendor, Q1 2022

Telit and Thales Acquisition Opportunity

The newly formed company will have a common R&D platform which will help save resources. In the coming times, we may see Telit Cinterion focusing on the IoT platform business to earn revenue on a recurring basis.

Thales has a strong position in Europe and Japan, whereas Telit has a good presence in North America and Latin America. This complementary relationship supports their dream of becoming the #1 cellular IoT player in the international market. Telit-Thales is already leading in the international IoT module market in terms of revenue. With this merger, Telit Cinterion may overtake Quectel in the international market in terms of shipments in the coming years.

Telit has already divested its automotive business in 2018, but Thales has a good customer base for some European automakers. How the joint venture treats this automotive business will be keenly watched. There is ample opportunity in the automotive business with growing connected and autonomous mobility. With the introduction of 5G, Telit may focus on the automotive segment as the automotive module business contributes higher revenue due to a higher average selling price (ASP).

IoT Module Launch

In recent times, Telit has done a great job launching many new modules. This helps Telit to target new regions depending on available technologies and provides an option for customers to select a product as per their requirements.

Telit-Mobilogix deal

Telit moved to acquire Mobilogix, a decade-old end-to-end IoT hardware, software and cloud solution provider to fulfill its ambition of becoming a more integrated player and one of the largest end-to-end white-label solution providers outside China.

Mobilogix’s comprehensive device engineering expertise and resources, which focus on optimizing the specifications for EMS and ODMs, and attainment of regulatory approvals and carrier certification, will help Telit provide solutions to customers with reduced cost and complexity, and faster time to market.

Furthermore, Mobilogix is known for its expertise in customized IoT projects, which provide businesses with solutions in various application verticals that are ready to certify and mass produce. This will help Telit expand its focus in growing segments such as telematics, micro-mobility, healthcare, construction and agriculture.

Chinese module vendors are trying to become integrated players to capture maximum share across the IoT value chain. Telit is also trying to adopt such a model with these recent acquisitions. For example, Quectel is trying to increase its footprint in the North American market with the establishment of a new ODM company, named Ikotek. Similarly, Fibocom established a new ODM company in 2019 for global customers through applications such as gateway, payment terminal, telematics and industrial applications. Telit is slowly becoming vertically integrated and trying to revive back its glory days in the IoT module market.

Solutions from the combined entity will provide a great choice for customers who want to diversify and do not want to depend on the Chinese ecosystem, and need tightly integrated solution expertise from one provider.

If Telit wants to compete head-to-head with Chinese module giants like Quectel and Fibocom, it has to develop an effective business strategy for each international market.

Mobilogix has a wide range of portfolios comprising custom IoT projects and solution design services based on three basic architectures, namely beacon, power and battery-operated architecture. Apart from this, it also offers cloud platform integration and custom firmware, which will add value to Telit’s portfolio not only from cellular but also from BLE beacon hardware designs.

Mobilogix has a global presence across key regions such as the US, China, India and Latin America. Its presence in China and emerging markets like India will help Telit grow its presence in these key regions.

Telit’s Acquisitions to Reshape Global IoT Module Market

Conclusion

  • Telit is becoming a more integrated player with these acquisitions and moving up the stack to become an end-to-end solution provider. The convenient and comprehensive solutions will add more value to its customers’ IoT project deployments and will be concurrent with its long-term vision of becoming the #1 international module player in terms of both shipments and revenue.
  • The acquisitions will help Telit provide solutions to customers from the design/manufacturing of hardware to cloud and security with regional diversification. This will help Telit cater to more application segments, thus improving both revenue and profitability.
  • However, industry experts will be keenly watching the entire positioning, offering, strategy and business model, which are changing in the IoT space as you need to be a large-scale and end-to-end player to succeed even though it is a blue ocean out there.

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