TomTom to stake everything on autonomous car?
Dutch mapping and navigation expert, TomTom, is putting its Telematics division in the shop window, the company announced on Thursday before the opening of the stock market. It looks TomTom is going to focus on its Automotive & Enterprise division with high-tech HD maps for the future autonomous car as its spearhead.
By putting up for sale its currently quite profitable section, CEO Harold Goddijn shows a lot of nerve, experts say, as the outcome is far from sure. “We want a clear focus”, Goddijn says. “Telematics is a very solid business, but it has a different profile than the rest of TomTom, making it difficult for the rest of the world to clearly situate the company.”
Managing car fleets
Telematics is the branch delivering services for fleet owners from transport companies or rental companies to manage their fleets with around 800.000 subscriptions in 2017. At first sight it looks like killing the goose that lays the golden eggs, as Telematics made a return last year of 162 million euro, growing with 4% since 2016 and making up nearly 20% of the company’s total return of 903 million.
What is left, are the shrinking consumer business of gps navigation hardware and sports watches. Still the largest chunk of return in 2017 with 412 million euro, but losing 27% compared to 2016.
There is also the Automotive & Enterprise division, however, that sells navigational and location services to companies like Microsoft, Uber and Apple and most of all to the car industry, good for 328 million in 2017, an increase with 22%, and this is what TomTom sees a bright future for.
Turnover in Automotive and Enterprise has increased by 20% in the first six months of this year, but last week the announcement that the Alliance Renault/Nissan/Mitsubishi will use Google navigation and entertainment software instead of TomTom’s decreased the share value of TomTom on the stock market by 24,4% immediately. It raised the question whether the Dutch map producer might be losing the so-called ‘dashboard battle’?
CEO Goddijn denies last week’s news has anything to do with putting up Telematics for sale. He says that decision was in the pipeline for months already, as several parties had shown interest before and all future options were considered by TomTom during this summer.
Worth 1 billion euro
Analysts from Swiss bank group UBS AG calculated selling Telematics might bring in 500 million to 1 billion euro for TomTom, based on the 2,4 billion dollar Verizon paid for American competitor Fleetmatics in 2016. TomTom as a whole is valued at 1,7 billion euro today.
Goddijn keeps his cards to his chest when asked what he would do with the money. “The decision to sell is definitely not taken because of financial trouble. We generate cash, are debt-free and have everything in balance.” Net result went 204 million euro into the red last year, though, compared to being still a positive 12 million in 2016.
HD maps for autonomous car
Apart from the navigation software it is offering for today’s cars, TomTom is developing high-definition maps that are far more accurate to define a car’s position on the road, up to 10 cm instead of a few metres.
TomTom is also working with German automotive supplier, Bosch, on digital maps that update themselves in real time, using artificial intelligence (AI) and data from the radar and video sensors of over a million cars in the future. All ‘components’ needed for the autonomous car of the future.
So far as known today, only Here, that used to be owned by Nokia and Microsoft, but was bought by German car makers Audi, BMW and Daimler, is capable of delivering an alternative for the HD maps. So TomTom points at the fact it is the only ‘independent party’ having this kind of technology in-house.