Private equity firms are holding conversations with providers of wireless connectivity products known as private long-term evolution (LTE) networks, said a source familiar with the matter and a spokesperson for private LTE networks products vendor Celona.
Investors are interested in “building out the business models” of these companies that may eventually appeal to the likes of Verizon, T-Mobile, AT&T as they upgrade existing private LTE networks, the source said. A company like Amazon, meanwhile, which sells retail goods and cloud services, has “huge data needs,” and could benefit from the increased connectivity and features private LTE networks provide.
Deal discussions are active and values are in the “hundreds of millions” of dollars, said the source. They “establish the framework for eventual consolidation.”
The source declined to name PE firms or companies involved, but the firms are willing to make “mid-risk” investments, he said.
Private LTE networks allow a company “more control of data,” said the source, and an ability to secure and keep information private, than public wireless networks or WiFi. The private network enables a company to select what users have access to the network, and where and what type of coverage it will provide.
Software can upgrade the network from LTE, a 4G technology, to 5G.
In March, DigitalBridge Ventures, the venture capital arm of infrastructure investor DigitalBridge Group, invested $60 million in Celona, a maker of wireless network products which includes private cellular networks.
David Callisch, marketing director at Celona, said, “Private equity firms are actively looking at this space. And it will be ripe for M&A activity. Cisco will buy its way into the market once it gets bigger and the technology more familiar and established to enterprises.”
“Cisco talked publicly about a private wireless solution but doesn’t have anything yet. It likes to wait to see if the market takes off. Then they look around for a good company to absorb.”
“We have big deals with Verizon, HPE/Aruba, NTT, Google and others that are reselling our gear for their own business,” said Callisch.
Other providers of private LTE network gear include Extenet Systems, GenXComm, Betacom and FreedomFi, noted Callisch.
Cisco, Verizon, T-Mobile, AT&T, Amazon, Extenet, GenXComm, Betacom and FreedomFi did not return inquiries requesting comment.