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Japan's Softbank is still prepared to splash some serious cash if it senses an opportunity, despite its bumpy recent track record of investing in adjacent markets.
December 6, 2023
The telco has just agreed to pay €473 million for 51% of connected car specialist Cubic Telecom.
Based in Dublin, Cubic offers various solutions, most notably its Platform for Application and Connectivity Enablement (PACE). Auto makers, via a single global integration, can use this cloud-based platform to launch a range of connected car services in any market they want.
Cubic has partnered with 90 mobile operators, allowing it to offer connectivity in 190 countries and territories. It currently connects 17 million cars, and it is adding them at a rate of 450,000 new vehicles per month.
In addition to the automotive market, Cubic also addresses the agricultural, heavy machinery, commercial fleet, and drones markets.
"In line with our 'Beyond Japan' strategic growth initiative, we are extremely pleased to be teaming up with Cubic Telecom to make a full-fledged entry into the fast-growing market for high-value IoT asset connectivity," said Softbank CEO Junichi Miyakawa. "With its global leadership position, we are convinced Cubic Telecom is the best partner for this opportunity, and we look forward to building connectivity platforms for next-generation social infrastructure."
Cubic will now become a subsidiary of Softbank, and the two will form a strategic partnership with the aim of capitalising on growing demand for software-defined connected vehicles (SDCVs).
"Today's announcement marks a significant milestone for our team and stakeholders, and we're excited to partner with Softbank to pioneer the future of software-defined connectivity," said Cubic CEO Barry Napier.
Under the deal, Napier will stay on as CEO and board member of Cubic. Daichi Nozaki, Softbank's senior vice president responsible for its global business, plus another two Softbank appointees, will join the board.
Three board seats will continue to be held by Cubic's existing major shareholders. These include chip maker Qualcomm, IoT module maker Sierra Wireless, and Volkswagen's automotive software unit, Cariad.
Softbank investors will be watching through their fingers to see whether this €473 million deal pays off. Some of them will have been burned in recent years by the misadventures of Softbank's venture capital arm, the Softbank Vision Fund, which racked up losses of $48 billion in the last two fiscal years.
Cars are one of the safer bets though, and the automotive market – in tandem with its progress towards electrification – is trying to make its models more connected and intelligent than ever before.
S&P Global in July said it expects the connected car market is likely to explode in the coming years. It predicts that 350 million vehicles on the road worldwide will have over-the-air update capabilities in 2025. It also expects a quarter of new vehicles sold in 2025 will have built-in 5G connectivity.
These two features should stimulate mobility use cases that rely on and require massive amounts of data for compute on-car, as well as transfer on the upload and download for data compute, storage and analysis, S&P said.
Indeed, citing forecasts from McKinsey, Cubic said by 2030, 95% of new vehicles sold worldwide will have some form of connectivity. Furthermore, connected car use cases could generate between $250 billion and $400 billion of annual incremental value for the ecosystem.
Cubic said it is ideally placed to capitalise on this opportunity.
"The focus on software rather than hardware means manufacturers can increase the value of a vehicle or device by adding new functionality, over-the-air, which will improve safety, comfort and performance," said Napier. "This, alongside the opportunity AI presents, will open up new collaborations and business models. The opportunities ahead of us are endless."
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
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