LONDON (Reuters) - Walkie-talkie maker Sepura SEPU.L is targeting cash-rich mining, oil and utility companies with its acquisition of Austria’s 3T, as growth prospects in the public sector slow, its chief executive told Reuters on Wednesday.
Industrial companies are increasingly embracing the two-way Tetra radios long used by police, fire and ambulance services, as their rugged qualities make them suitable for tough environments such as mines or oil and gas fields.
Most major European countries have fully equipped Tetra networks for their emergency services, meaning opportunities for further sales are limited, especially as governments across the continent are slashing public spending.
“As many of the regions across the world have digitised their public safety offerings, the market itself is going to run out of big countries who need to upgrade their networks,” Sepura Chief Executive Gordon Watling said in a telephone interview.
“There aren’t many Germanys left,” said Watling, adding the acquisition of infrastructure provider 3T should expand Sepura’s addressable market by up to 50 percent.
Germany is the world’s biggest market for radios that use the Tetra standard, which has only just been approved in the United States and Canada. China and India are upgrading their networks city by city, rather than a nationwide rollout.
Britain’s Sepura is a market leader in Tetra radios, with about 40 percent of the global market, neck and neck with Motorola Solutions Inc (MSI.N) and ahead of EADS’s EAD.PA EAD.DE Cassidian.
Until now, it has had to partner with radio network equipment companies, which are often also its rivals, but its acquisition of 3T will enable it to offer a complete service to commercial customers.
Earlier, Sepura said it had bought 3T for 8 million euros (6.4 million pounds), rising to 13 million euros if it meets certain financial targets. It expects the acquisition to be earnings accretive from this year.
Sepura makes about 25 percent of its revenue from commercial customers, the fastest-growing segment of the Tetra market, while 3T makes about 90 percent from that segment.
Sepura shares closed 4.9 percent higher at 64.5 pence.
Editing by David Hulmes