KORE Wireless is emerging from the shadows to become a major player in enterprise IoT in the 5G era by going public via a $1bn SPAC (special purpose acquisitions company) deal.
Under the arrangement, scheduled for completion in mid-2021, KORE will merge with private equity firm Cerberus Capital Management, which is already publicly traded in a deal that values the combined entity at a pro-forma enterprise value of $1.01bn.
According to KORE, its deal with Cerberus Telecom Acquisition Corp (CTAC) will raise about $484m in cash that will be used for investment in its IoT portfolio with the aim of being a major player in a rapidly expanding field. CTAC is a SPAC that raised $250m through an initial public offering in 2020 with a view to taking KORE public. SPACs are shell companies set up purely to raise funds, acquire a private entity and then take it public, in order to circumvent the arduous processes of traditional IPOs. The combined company in this case aims to be listed on the New York Stock Exchange trading under the ticker symbol KORE.
Such SPAC deals to finance an acquisition and go public by stealth have become very fashionable, with incidence rising during the Covid-19 pandemic, leading to references to a ‘blank check boom’. The fact anybody can buy shares in a SPAC shell company in anticipation of the actual merger or acquisition before the event has helped stimulate the field and provide a market for speculative investments. For this reason, SPACs have been referred to as ‘poor people’s equity funds’.
In KORE’s case the motives are the same as many others, to enjoy the financial fruits of IPO without the pain. It anticipates increasingly intensive competition in enterprise IoT with some of the larger players. These include Tier 1 telcos themselves, such as AT&T, BT, Vodafone, Deutsche Telekom and Telefónica, all active in the field.
Some telcos have formed more specialized telecom technology companies either organically or with the help mergers. One example is BCE, formerly Bell Canada Enterprises, which absorbed the remnants of Nortel, once the country’s largest company as a major telecom equipment maker, after it filed for bankruptcy protection in 2009 in a case that rumbled on for at least another eight years. There are also some public specialist companies such as Sierra Wireless and uCloudLink, as well as other private ones like Skylo Technologies, so it is becoming a well-populated field.
KORE was founded in 2003 as an IoT company well before most had heard of the term, specializing in one sector that was already gaining traction, fleet management and tracking, which remains its biggest market. Growth was organic and slow, leading the company to describe itself in the words of novelist JRR Tolkien, best known for ‘Lord of the Rings’, as “little by little or Internet of Things solutions and connectivity-as-a-Service (Caas)”.
The main development in earlier years lay in expanding from its North American base to establish a global presence in fleet tracking, while extending into medical devices and mobile payment systems. It was anointed in 2007 by Network World as one of nine companies in the data communications field to watch and perhaps at last it is on the verge of justifying that accolade.
One of its core offerings is its KORE Managed Tablet package, which revolves around a range of SIM and eSIM options with encouragement to use the latter. Other devices supported include routers, gateways, and wearables, running Android, iOS, or dedicated ruggedized units, typically preconfigured for connectivity by selected carriers.
It offers a connectivity management platform with tools for firstly assessing whether desired devices are capable of operating in an eSIM environment and then for automatic provisioning. The eSIMs themselves can be embedded chips lasting the lifetime of the device, or add-on cards.
Customers can perform their own remote subscription management, and run custom tests such as validating compliance with the two 5G LPWAN protocols, LTE Cat-M and NB-IoT, as well as over-the-air remote file management.
All of this should be expected and rivals would be able to offer much the same. KORE then sets out to differentiate itself on analytics within its target sectors, where it would flout the advantages of having been in the IoT business from the start. It offers as an example the ability to combine engine ignition times with the vehicle model and weight to calculate optimum start and stop times, reducing fuel costs which can be significant for large fleets.
Such savings, combined with reduced human resource costs, are improved further by incorporating data analysis with solutions to the “travelling salesman problem”, which in simple terms involves organizing a salesperson’s journeys such as to minimize the distance covered, time taken, or total cost of the journeys. In the case of fleet management this entails incorporation of real time traffic update to optimize routes against chosen parameters.
It can be seen there is plenty for IoT providers to add value in their target sectors.