RACO Uses M&A to Beef Up Its M2M Play
The merger will combine Position Logic's GPS tracking app with RACO's access to CDMA and GSM networks across the globe. RACO President John Horn says the company brings 400 new customers to RACO's base of 1,000, with only five overlapping. Financial terms of the deal weren't disclosed.
This acquisition is all part of RACO's strategy to be the easiest to do business with, Horn says. But, it's also part of its strategy to grow through M&A, easing fragmentation in the M2M space and giving companies a reason to look outside the big four U.S. wireless operators, even as all four step up their focus on connected devices.
RACO took over all of T-Mobile's M2M business in 2011 when AT&T's acquisition of the carrier appeared eminent. Since then, T-Mobile got back in the game on its own, and RACO has partnered up with many other wireless operators, acting as an MVNO over their networks and offering enterprises access to several. (See T-Mobile Outsources its M2M Strategy) and T-Mobile's Back in the M2M Business).
At the same time, however, the big operators, which are keenly interested in M2M, have been its main competition. Horn dismisses the threat of competition, noting that the carriers can't meet the needs of all the potential customers out there and won't play nice with each other anyway, making them unattractive to companies that can't rely on just one network technology.
Even so, RACO is doing what it can to shore up its defenses. Since a major investment by private equity firm Iverness Graham in October, it has been working on competing by acquiring companies that augment its business, add new capabilities and eventually those that compete with it.
"The market is fragmented and will be for awhile yet," Horn says. "We're one of the key players that's solving it by bringing multiple carriers under one platform. We'll do what we can to bring in more value. There will be more consolidation, and we'll facilitate that."
Horn says to expect RACO to acquire at least one more company relatively soon. He's not ruling out the possibility of RACO becoming an acquisition target either, perhaps by one of its big operator partners.
"We will build a large successful company with a large amount of scale," Horn says. "Who knows what the next step will be beyond that. To say that we will never be acquired is an unrealistic, but we're not in it to flip the business."
— Sarah Reedy, Senior Editor, Light Reading