Telus Corp. acquires ADT Canada for $700M
Telus Corp. is buying ADT Canada for about $700 million, a move that will bolster the telecom’s suite of product offerings, but also bring it into direct competition with tech giants such as Amazon and Google.
ADT Inc. will still operate in the United States, but Telus is getting around 500,000 customers and 1,000 employees in the security services business across the Canada with the acquisition.
In announcing the deal on Tuesday, Telus noted it already has about 100,000 home and business security customers.
Scott Young, principal research adviser with Infotech Canada, said the move makes sense for Telus and boils down to one word: “Stickiness.”
Faced with increased competition in their wireless and internet businesses, and cord-cutting on the television side, telecoms have been trying to hold onto customers and grow revenues by bundling services together.
“This adds another 500,000 to (Telus),” Young said.
“That’s 500,000 potential people that also did not necessarily have other Telus services ...”
There are many reasons why home security services in particular are alluring to telecom operators, and Tuesday’s acquisition is just the latest in a series of moves.
Rogers launched home monitoring services back in 2011, and in 2017 Bell Canada acquired Alarmforce for $182 million.
Bell then turned around and sold the Western Canada portion of Alarmforce to Telus in early 2018 for $66.5 million.
The deal for ADT is much larger, but National Bank of Canada analyst Adam Shine noted that on a per-subscriber basis the Alarmforce and ADT deals are in the same ballpark.
“We view this as a good transaction for the company. Security and automation clearly represent areas that can be monetized as part of a bundle for businesses but also consumers in the context of health and home,” Shine wrote in an investor note. “Related solutions will find their way into smart cities, buildings, and enterprise with coming 5G serving as the great enabler to all these things.”
The idea of bundling is the most alluring part of home security, according to Nigel Wallis, vice-president of industries and IOT with IDC Canada.
“Once they can prove themselves there, then potentially they can offer more of a whole-home solution, which might include a smarthome thermostat, might include digital flood warning in your basement ...” Wallis said.