Telit Communications plc (AIM:TCM) today announced that it acquired 75% of Bellwave m2m Co. Ltd, the machine-to-machine (M2M) division of Bellwave Co. Ltd., a South Korean wireless communications developer, for $6.18 million. Telit will invest $5 million in Bellwave m2m’s working capital for its current operations. Telit also has a call option on the remaining 25% of Bellwave m2m for $2 million, exercisable through December 2006. The deal is expected to be closed in June 2006, subject to obtaining the usual permits.
The South Korean module market is estimated at $40-50 million. Bellwave m2m controls half of this market. The company had $21 million revenue in 2005, and its net assets are worth $2 million. The company has 40 employees, mostly engineers. The company will focus on the development of CDMA 1x and EVDO products for Asian and American markets.
Until now, Telit only developed modules for the GSM market, and the company wants to use Bellwave m2m as a sales conduit in developing markets in Asia, Australia and New Zealand.
Telit CEO Oozi Cats said, “The combination of Telit's and Bellwave m2m's expertise brings many synergies and benefits, most noticeably in product range and geographical presence. Bellwave m2m brings to Telit a solid customer base in the Korean market and depth of experience in the CDMA market that will create a strong gateway to expand Telit's presence in the Asia Pacific and US markets.”
Telit operates in two sectors: the first is the marketing of cellular devices to independent operators and distributors; the second is the development and sale of cellular modules for the M2M market. At present, the module sector accounts for a small share of Telit’s revenue, and generates losses, but it is expected to become the company’s growth engine.
M2M technology is supposed to be one of the most promising business prospects in wireless. The expansion of wireless networks opens infinite possibilities for transmitting data between machines, from managing vehicle fleets, through alarm location, surveillance cameras, and the monitoring of automatic vending machines, to command and control of water and electricity meters.
Published by Globes [online], Israel business news - www.globes.co.il - on May 30, 2006
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