Sierra Wireless Bolsters M2M Plans With Sagemcom Offer

Now in the works is a plan by Sierra Wireless to purchase “substantially all” of  France-based Sagemcom’s machine-to-machine (M2M) business for nearly $57 million  in cash considerations plus assumed liabilities.

Because of the international flavor of this buyout, the proposed deal is subject to completion of the consultation process with employee representatives. Once this has been ironed out, Sagemcom will be able to enter into a definitive agreement with Sierra Wireless, perhaps sometime during the third quarter.

Sierra Wireless plans to fund the purchase price out of cash reserves.

Sagemcom’s growing M2M franchise includes 2G and 3G wireless modules as well as rugged terminals for GSM-Railway (GSM-R) applications. The business generated approximately $50 million in revenue and was profitable during the twelve-month period ended Dec. 31, 2011.
 
Notes  Jason Cohenour, president/CEO at Sierra Wireless, “With a strong market position in key segments, a culture of innovation, and experienced teams based in Paris and Shenzhen, Sagemcom M2M is an ideal fit for Sierra Wireless.”

More About M2M

A new report from Analysys Mason predicts M2M device connections worldwide will grow by a factor of 20 in the next 10 years, from 100.4 million today to 2.1 billion. Revenue associated with M2M connectivity will also increase as well, going from $5.7 billion last year to $50.9 billion in 2021.?

The report predicts that ARPU rates generated by M2M connectivity will decline “markedly” during the 10-year timeframe, from a worldwide average of $4.71 per month per connection to just $1.98 in 2021.??

“This per-connection revenue decline will be caused by increasing price pressure and growth in the number of M2M device connections in emerging markets,” explains Steve Hilton, lead author of the report and principal analyst for Analysys Mason’s Enterprise and SME Strategies research programs. “ARPU rates for M2M applications are generally lower in emerging markets than in developed markets.”

The share of worldwide connections attributed to developed markets will decline during the next decade, from 69 percent in 2011 to 59 percent in 2021. Similarly, developed markets’ share of worldwide revenue will have declined from its current level of 76 percent to 64 percent in 2021.??In 2011, slightly less than 20 percent of M2M connections were over fixed-line networks, and it is predicted that this figure will decrease to just 7 percent by 2021. According to the report, almost all fixed-line M2M solutions are in developed countries.?

And here are more findings:

>> Utility-sector solutions will account for 61 percent of worldwide M2M device connections by 2021, growing at a compound annual growth rate of 50 percent.
 
>> The penetration of M2M connections as a percentage of overall population in developed markets was 5 percent in 2011, but this is predicted to grow to 86 percent by 2021.
 
>> The automotive and transport sector will have the highest share of connectivity-related revenue by 2021 (43 percent), driven (no pun intended) by the increasing adoption of consumer-connected car solutions.