* Agrees to buy Italy's Cobra Automotive Technologies
* Offers 1.49 euros a share, or 145 million euros
* Tech firms race to connect more products to internet
* Cars at forefront of machine-to-machine communications
(Adds analyst, detail, background, shares)
By Kate Holton
LONDON, June 16 Vodafone is buying an
Italian car electronics maker for 145 million euros ($197
million), seeking to get ahead in the race to connect more
products to the internet and offset slowing growth in its core
mobile phone business.
Telecoms and technology firms are looking to tap an expected
surge in demand for so-called machine-to-machine (M2M)
communications - or using the internet to get products from cars
and washing machines to turbines and medical equipment to carry
out more tasks, more efficiently.
Cars are at the forefront of the new industry, as
manufacturers strive to add new features such as streaming
music, playing audio books, navigation aids and security
improvements to their vehicles.
Only about 10 percent of vehicles currently have built-in
connectivity to the internet, but that number is expected to
rise to more than 90 percent by 2020, according to British
consulting firm Machina Research.
Vodafone said on Monday it had agreed to buy Cobra
Automotive Technologies, which provides products
aimed at improving car security, telecommunications and vehicle
tracking for the automotive and insurance industries.
"The combination of Vodafone and Cobra will create a new
global provider of connected car services," said Erik Brenneis,
Director of M2M at Vodafone.
"We plan to invest in the business to offer our automotive
and insurance customers a full range of telematics services."
Other mobile operators are also investing in the M2M
industry - also known as "the internet of things" - looking for
new sources of income as stiff competition and regulation slow
growth in their core market.
For example, Verizon Communications, the largest U.S.
wireless carrier, spent $612 million in cash in 2012 to buy
Hughes Telematics, which sells products including GPS tracking,
communications and safety features in cars.
OWNING THE SERVICES
Technology companies are also deeply involved.
Earlier this year, Apple unveiled its CarPlay
technology, which integrates its iPhone with a car and allows
drivers to use certain apps on the dashboard with Siri, the
voice-enabled assistant, to view maps, make calls, listen to
music and send and receive text messages.
In other industries, examples of M2M technology already in
use include smart meters which monitor energy usage at homes, or
devices in offices which tell an owner when their coffee machine
Enders analyst James Barford said mobile operators were
still undecided whether they wanted to provide just the network
capabilities for M2M communications or actually compete with IT
providers to manage the services themselves.
"Although there is scope to have a very large number of
connected devices in due course, typically the volume of traffic
that goes over them is pretty low because it's just logistics
data," he said.
"Increasingly more of the value is in the service wrapped
around it. This is a small move towards owning more of the
The GSMA, the trade body for mobile operators, estimates
there were 195 million M2M connections in 2013, with the highest
usage seen in the car and consumer electronics industries.
Vodafone said it would offer 1.49 euros a share to buyout
shareholders in Italian group, around 50 percent higher than its
previous closing price.
Cobra's majority shareholder Intek Group said in a
statement it had agreed to tender its 51.4 percent stake in
Cobra for 74.3 million euros.
At 1015 GMT, Cobra shares were up 49 percent at 1.473 euros,
while Vodafone's stock was down 0.5 percent at 194.05 pence.
($1 = 0.7345 Euros)
(Editing by Sarah Young and Mark Potter)