Lifting the lid on IoT investment

The Internet of Things (IoT) has seen increasing levels of investment and M&A activity as growing consumer awareness has gradually transformed the futuristic technology into a viable revenue stream.

Look around the market and business is booming. As first reported by TMT Finance, 2016 saw French start-up Sigfox expand its IoT operations after securing a hefty amount of equity, while earlier this year Actility obtained a six-figure sum through its own funding round. Actility also acquired a M2M firm [see TMT Finance archives], highlighting the IoT market is ripe for M&A. TMT Finance is currently following the billion-dollar sale of Toshiba’s smart meter unit in Switzerland [see TMT Finance archives], for which just two bidders remain.

This has not gone unnoticed by telecom operators which are now actively changing business strategies to carve out their own IoT foothold in the face of shrinking margins and ARPU. Roaming revenues across Europe have effectively been slashed and with OTT players such as Netflix and Amazon dominating the content arena, connected products, particularly in the home, offer a consistent monthly revenue for telcos.

TMT Finance has reported that Italian telco Wind Tre recently unveiled a new unit to focus on IoT solutions while in Ericsson is selling part of the business to prioritise its services around the connected market. Indeed, Orange has seen the value of expanding outside telecommunications, recently considering expanding its IoT footprint with the acquisition of German smart metering company Ista International. The French telco is also a strong investor in IoT service provider Actility.

IoT investments are also being made by semiconductor companies such as Bosch who recently injected six figures into a new semiconductor plant with the sole purpose to meet IoT demand. This allows companies to reduce their reliance on smartphone chipsets. This is particularly important as smartphone manufacturers increasingly look to bring these services in house, the first casualty of which was Imagination Technologies when its share value halved after a high profile customer cut ties [see TMT Finance archives]

While there is no shortage of IoT activity, the market is about to be further bolstered with the UK’s upcoming 5G spectrum auction, the long-awaited standard for which has been announced by Ofcom this week. IoT has traditionally suffered from bulky 4G networks build for mobile, not IoT, services, causing slow transmission – or high latency – between connected devices. The introduction of 5G removes that barrier and has the potential to really lift the lid on IoT revenues.

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