RACO Wireless is set to announce two acquisitions that will significantly enhance its managed-services offering to M2M customers.
The M2M-focused MVNO had made clear its acquisition intentions last October, when private-equity group Inverness Graham Investments took a majority stake in the business, and has spent much of the intervening period examining potential takeover targets.
Speaking on the sidelines of this week’s CTIA Wireless Show in Las Vegas, John Horn, the president of RACO Wireless (Cincinnati, OH, USA), told M2M Zone that one acquisition would be announced in the next three weeks, with another to follow in July.
“The one we’ll announce shortly will be a significant game-changer and will allow us to provide considerably more services than we provide today,” he said. “It’s one of those cases where one plus one equals five in terms of synergies.”
Asked for further details on the acquisitions, Horn said that RACO Wireless has already made investments in call center services and billing systems to improve its offer and will be addressing “different parts of that equation” through the takeovers.
“We’re going to do everything we can to acquire the technologies that will allow us to provide as many tools and as much support as possible,” he said. “The acquisitions will make a huge difference in terms of the value that we bring.”
RACO Wireless is also working hard to expand its footprint. Having enjoyed a long relationship with T-Mobile USA (Bellevue, WA, USA), and a shorter one with the UK’s EE (Hatfield), the company recently announced partnerships with Telefonica (Madrid, Spain), Sprint (Overland Park, KS, USA) and Canada’s Rogers Communications (Toronto, Canada), and Horn says a further network partner will be revealed sometime this year.
RACO Wireless still lacks an Asian partner and so news of a deal with a carrier from the region would not come as a surprise.
M2M partnerships between carriers and MVNOs have been a major theme at this week’s CTIA Wireless Show – Wyless (Lawrence, MA, USA) has teamed up with both Telefonica and SingTel (Singapore), while KORE (Alpharetta, GA, USA) has struck its own deal with EE.
Horn thinks RACO Wireless could form another two partnerships next year but says there is little point in having more than ten such deals altogether.
The partnerships with Telefonica, EE and Rogers mean RACO Wireless can already offer services throughout the Americas and Europe, while the Sprint and T-Mobile deals connect it with the two US operators that have promised to maintain their 2G networks in the long term.
Last month, Sprint signed a deal with ublox, a provider of 2G modems, aimed at capturing M2M business from AT&T (Dallas, TX, USA) and Verizon Wireless (New York City, NY, USA), both of which have announced plans to shut down their 2G networks in the next few years.
“For them everything is about LTE but the financials and the business model don’t work right now,” said Horn.
Horn says the deal between Sprint and ublox is “great” for RACO Wireless, but several analysts have questioned the long-term viability of the MVNO model given a surge of carrier interest in the M2M opportunity.
RACO Wireless insists that carriers cannot match it on flexibility and are often chasing much larger corporate customers, but he agrees there will be consolidation among MVNOs in the near future.
“A lot of them haven’t figured out how to make any money and they can only do that for so long,” he says.