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Verizon’s New Acquisition Will Boost Its Telematics Portfolio

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Jun. 24 2016, Updated 4:30 p.m. ET

Verizon to acquire Telogis

IoT (or Internet of Things) and telematics are relatively small but growing components for Verizon (VZ). According to Verizon, “it has signed an agreement to purchase Telogis,” an acquisition that could further boost its telematics portfolio. As per Andrés Irlando, Verizon Telematics CEO, “With a comprehensive enterprise product portfolio and partnerships with some of the world’s leading vehicle and equipment manufacturers, Telogis brings a world-class software platform and new distribution relationships to Verizon Telematics’ already expansive suite of connected vehicle solutions for consumers and enterprise customers.”

According to Verizon, “The acquisition is subject to customary regulatory approvals and is expected to close in the second half of 2016.” Telogis’s built-in telematics solutions are used by customers including Ford (F), GM (GM), Hino, Mack, Volvo, Isuzu, and Manitowoc Cranes (MTW).

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Performance of Verizon’s IoT and Telematics component

On a year-over-year (or YoY) basis, the growth trend for Verizon’s IoT and Telematics revenue continued in 1Q16. As per Verizon, its IoT revenue rose ~25% YoY to reach ~$195 million during the quarter. According to the company, overall in 2015, this component’s revenue had increased by ~18% YoY to ~$690 million. Moreover, in 2014, the YoY growth figure here was ~45%.

For diversified exposure to some telecom companies in the US, you can consider investing in the SPDR S&P 500 ETF (SPY).

The ETF had a total of ~2.7% in AT&T (T), Verizon, CenturyLink (CTL), Level 3 Communications (LVLT), and Frontier Communications (FTR) at the end of May 2016.

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