Verizon To Acquire Hughes Telematics for $612 Million

Updated on

Verizon To Acquire Hughes Telematics for $612 Million

One of the biggest telecommunications companies in the United States, Verizon Communications Inc. (NYSE:VZ) has broadened its horizons with its latest purchase of HUGHES Telematics Inc (OTC:HUTC).

Hughes Telematics, which has been in business since 2006 focuses on providing call center and hardware platforms to vehicles. With many vehicles having connected services today, this is a wise investment for Verizon and can only enhance their market value in the US and abroad.

Verizon’s President of Enterprise of Solutions John Stratton anticipates that the purchase of the Machine-to-Machine Technology from the Hughes acquisition will definitely bring significant growth to the company. This is a strong market for Verizon to be involved in and will increase their presence in the automotive technology market.

Verizon currently is competing against other telecommunication giants such as AT&T Inc. (NYSE:T) and Sprint Nextel Corporation (NYSE:S) in the heavily saturated cell phone market. An expansion into a slightly different area is much needed new revenue path.

In addition to the carriers listed above, and with the economy the way it is, most people have less than perfect credit and are turning to no credit check and no contract companies such as Cricket and Metro PCS mobile carriers. This puts another strain on Verizon’s attempts to remain competitive in the cellular phone service industry.

UBS AG (USA) (NYSE:UBS), Debevoise and Plimpton LLP recommended the acquisition to Verizon as a sound marketing strategy for the telecommunications provider. The new purchas which comes out to $12 a share or a total of $612m will be finalized in the third quarter of 2012.

In addition to the communications and GPS features, it offers for vehicles Hughes also offers emergency services such as dialing 911 if ever the owner of the vehicle is in a situation where they need help.

As this new link between Verizon and the Automotive Technology Industry develops this can be another way for Verizon to maintain some edge over other telecommunications companies by offering services that include an owner’s vehicle, home, and telephone.

HUGHES Telematics Inc (OTC:HUTC) saw a big jump on the news. share went from $4.35 to $11.85 yesterday after the announcement. Verizon Communications Inc. (NYSE:VZ)’s stocks remained unchanged at $41.53 a share. Verizon has seen its stock increase 3.8 percent this past year.

While competition remains fierce with a struggling economy it is refreshing to see there is room for improvement for companies and the consumers. It is signs like this that show the economy may possibly be on its way to improvement.

One can only hope that things continue on a straightforward path to success both for Verizon, the economy and all those affected. One thing is certain though with Verizon being able to offer automotive technology along with their traditional cell phone, phone and internet services it will keep the telecommunications giant able to move forward in the future.

Leave a Comment