Proving the Business Case for the Internet of Things

Kore acquires RacoWireless to create major M2M player

Iain Morris
November 13, 2014
Kore Wireless has announced a takeover of rival RacoWireless that looks set to create a major force in the M2M market by bringing together two of the biggest mobile virtual network operators (MVNOs) in the industry.

The combined company will serve more than three million subscribers on behalf of more than 1,500 customers, making it a rival to some mobile network operator business units in terms of the number of connections it serves, according to Robin Duke-Woolley, the chief executive of market-research company Beecham Research.

The deal was announced shortly after private equity player ABRY Partners (Boston, MA, USA) took a majority interest in Kore – a move that could herald further takeover activity by the MVNO in the coming months.

Kore (Alpharetta, GA, USA) did not disclose the financial terms of the RacoWireless (Blue Ash, OH, USA) acquisition – other than to say it was an “all-cash transaction” – but says it will benefit from additional scale and reach following the deal, which is expected to close formally by the end of the year, pending regulatory approval.

“We are standing at a historic inflection point in our industry where scalability and innovation are critical, and the financial partnership with ABRY delivers the capital and expert support necessary to rapidly develop the scale demanded by global customers in what has so far been a fragmented market,” said Alex Brisbourne, the chief executive of Kore.

“Strategic acquisitions both in advanced connectivity and richer applications solutions are an important goal, as scale and global reach are of paramount importance to our large applications and enterprise customers,” he added.

Both Kore and RacoWireless have built international M2M connectivity businesses through deals with network operators around the world, developing agility and expertise that have given them an advantage over many infrastructure players targeting the same opportunity.

Although network operators are now taking the M2M opportunity more seriously than ever before, Duke-Woolley believes the likes of Kore and RacoWireless will continue to be a threat in this market.

“What is often forgotten is that most of these independent network providers have been working in the M2M market for a long time – often since before the term ‘M2M’ came into popular use and well before the MNOs started to take real interest in it,” he said in a blog published on Beecham’s website. “With that sort of experience you get to know exactly what customers need and you have also seen most of the possible challenges to making the solutions actually work in the field.”

Even so, the new entity will face competition from other MVNOs that have been investing in expansion.

In February, Kore and RacoWireless rival Wyless (Lawrence, MA, USA) announced a takeover of Aspider M2M, an MVNO with a major presence in Europe, while module maker Telit (London, UK) has beefed up its own connectivity offerings with the launch of its One Stop, One Shop service.

As Duke-Woolley notes, Wireless Logic (Beaconsfield, UK) – an MVNO based in the UK – has also been growing much faster than the overall market in recent months.

Kore has yet to indicate whether it will retain the RacoWireless brand or if the merger will lead to any redundancies.

Moreover, if Brisbourne is to continue as chief executive, John Horn – the current chief executive of RacoWireless – will at best have to make do with a number-two role in the new organization.
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