T-Mobile and Sierra Form JV

Deutsche Telekom AG’s (DT - Analyst Report) T-Mobile unit and Sierra Wireless (SWIR - Snapshot Report) recently agreed to form a joint venture to provide machine-to-machine (M2M) wireless communications in several markets. Initially, this business venture will target European markets, with special emphasis on Germany. The M2M solution will offer innovative solutions for the fleet, automotive, navigation, utility and security markets.

T-Mobile is a top worldwide wireless service provider with more than 148 million subscribers, while Sierra Wireless is a global leader for embedded wireless modules. Recently, Sierra acquired Wavecom S.A., a primary provider of embedded wireless technology for M2M communications. This acquisition has significantly diversified Sierra’s business verticals into the high-margin M2M segment.

Wavecom has a dominant market share in Europe and Asia-Pacific regions. The combined entity now offers the most comprehensive wireless data product portfolio that includes PC adapters, 2G & 3G embedded modules, M2M terminals and related software. The new joint venture will make these M2M products available in 50 countries where T-Mobile has a presence.

M2M is a rapidly growing market opportunity. According to various industry sources, by 2012, M2M connections may reach over 85 million worldwide. The joint venture will deliver seamless, fully integrated M2M communication with global connectivity. The M2M business model is emerging as a new source of revenue for several telecom operators and equipment manufacturers.

Last July, Verizon Wireless (VZ - Analyst Report) and Qualcomm Inc. (QCOM - Analyst Report) had also formed a similar M2M joint venture. The T-Mobile-Sierra business venture will ship the latter’s embedded modules with pre-loaded T-Mobile subscriptions that will enable the customers to save time and money.