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Verizon May Go For An Absolute Kill
Release Date:2016-09-06
Sep. 5.16 | About: Verizon Communications (VZ)

Growth at reasonable price, contrarian, medium-term horizon, macro
Summary
Verizon's acquisition of Telogis and Fleetmatics is making more sense today.
Growth in telematics segment can be huge by 2020.
Verizon will probably destroy the competition.
Verizon Communications (NYSE: VZ) is an industry leader, with a fat dividend yield and a strong balance sheet. The company has been pushing the boundaries in technological advancement for years, and I believe it may be looking for an absolute kill in the next big growth market: Internet Of Things.
Verizon's IoT technology sees significant traction in its telematics segment. In Q2 earnings call, the company revealed that its revenue from IoT grew 25% to $205 million (yoy), led by strong demand for telematics product, including Hum.
Verizon Telematics, a subsidiary of Verizon, has a fleet management solution called NetworkFleet.
I have reasons to assert that after its acquisition of Telogis and Fleetmatics (NYSE: FLTX), the company may be staring at billions of dollars in potential future revenues. Verizon has already become the largest fleet management solution provider worldwide.
According to a research report on Connected CarTech, the commercial telematics market is set to grow from $20.42 billion in 2015 to $55.14 billion by the end of 2021, at a CAGR of more than 18% between 2016 and 2021.
Commercial applications of telematics can be seen in infotainment, insurance, fleet/asset management, satellite navigation, tele-health solutions, and others including emergency warning systems. Of these, fleet and asset management occupies a significant 28% market share, as of 2015. Transporation and logistics segment dominated with a market share of 54%. Other industries are expected to witness strong growth too.
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