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Vodafone enters connected car market with acquisition of Cobra Automotive

UK Telecoms company Vodafone plans to expand into automotive telematics by acquiring Cobra Automotive Technologies, an Italian provider of security, telecommunications and vehicle tracking data 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, Vodafone’s director of M2M (machine-to-machine communications) at Vodafone said. “We plan to invest in the business to offer our automotive and insurance customers a full range of telematics services.”

Like other mobile phone operators, Vodafone wants to tap into an expected surge in demand for M2M communications. These use the Internet to help everything from cars and washing machines to turbines and medical equipment carry out more tasks, more efficiently.

Cars are at the forefront of this new industry, as manufacturers strive to add new features such as streaming music, playing audio books, navigation aids and security improvements to their vehicles.

Vodafone has recently secured contracts with Volkswagen Group, its subsidiary, Audi, and BMW for the supply of SIM cards, the small plastic chips in connected devices that contain subscriber data.

Vodafone spokesman Simon Gordon said the acquisition of Cobra will enhance the company’s competitiveness in this growth sector by enabling it to offer automakers a suite of connectivity and applications.

Guy Peddy, an analyst with Macquarie Bank in London, said: “Vodafone is looking to make its solutions more unified. If I’m having a generic SIM-card relationship with a carmaker, I should try to get more of the value chain by providing the software as well.”

Cobra, which already counts Renault, Toyota and Ferrari among its customers, also works with insurance companies, for example by providing them with automatic notification of crashes using built-in vehicle sensors.

Only about 10 percent of vehicles currently have built-in connectivity, but that number is expected to rise to more than 90 percent by 2020, according to British consulting firm Machina Research.

Other mobile phone operators are also investing in the M2M industry looking for new sources of income as stiff competition and regulation slow growth in their core market. In the U.S., for example, for example, Verizon Communications paid $612 million in cash in 2012 for Hughes Telematics, which sells such products as GPS tracking, communications and automotive safety features.

Technology companies are also deeply involved in the emerging sector. Earlier this year Apple unveiled its CarPlay technology, which integrates its iPhone with a car and allows drivers to use its voice-enabled assistant, Siri, view maps, make calls and send and receive text messages. Demonstrating just how far lines between automotive and communications sectors have become blurred, last month Google unveiled its own design for a driverless vehicle.

Vodafone said on Monday that it had agreed with the main shareholders to buy their combined 74 percent stake in Cobra and was now offering to buy the outstanding balance held by other shareholders at the same price of €1.49 a share, valuing Cobra at €145 million.

Bloomberg & Reuters contributed to this report