The telecom giant announced Monday that it has agreed to acquire privately-held Sensity Systems for an undisclosed sum. Based in Sunnyvale, Calif., Sensity Systems builds Light Sensory Networks (LSN) that aim to improve lighting control and energy efficiency. LSN is behind the idea of a "smart city," which refers to the idea of using the IoT to manage a city's properties and systems such as power plants and water supply networks.
The acquisition, which is subject to customary regulatory approvals, is expected to close in the fourth quarter.
Verizon is bringing Sensity Systems to the fold just a little over a month after it agreed to buy Fleetmatics Group (FLTX) for $2.4 billion in a move to bolster to bolster its capabilities in telematics, a segment of IoT. Earlier this year, the company also agreed to acquire Telogis for an undisclosed sum.
"Verizon continues to round out its capabilities in Internet of Things," said Edward Jones analyst Dave Heger via phone, adding that IoT has often been cited as a future potential growth driver for Verizon.
While Sensity Systems itself won't generate a huge amount of service revenue from connecting street lights and stop lights, the analytics behind enabling such offerings represents a more significant revenue opportunity, Heger added.
Verizon has been aggressively identifying and investing in various end-markets for IoT -- whether it be telematics or city governments. Still, the IoT revenue is still just a drop in the bucket for Verizon, he explained, adding that this will likely be the case for quite some time.
"Verizon wants to be well-positioned so that if [IoT] becomes more meaningful, it can be the next leg of growth," Heger said, noting that the growth rate for Verizon's IoT division has been fairly strong.
He further said the telco will likely continue pursuing smaller acquisitions to get exposure to various end markets. Verizon has done quite a bit of work in telematics already and is boosting its presence in the smart city segment of IoT with the Sensity purchase. The company could also make a move in the industrial end-market of IoT, according to Heger.
Sensity had previously secured $74 million in venture capital funding from a group of investors including General Electric's (GE - Get Report) GE Ventures and Cisco Systems' (CSCO - Get Report) Cisco Investments.
Out of the wireless carriers, Verizon certainly has been the most aggressive in terms of IoT M&A.
AT&T (T - Get Report) has been more active with partnerships in the connected car segment, pursuing partnerships with automakers including Audi, Porsche Automobil Holding, Volvo and General Motors (GM - Get Report) , among others, to offer LTE networks and related services inside of vehicles.
T-Mobile US (TMUS - Get Report) and Sprint (S - Get Report) haven't made much movement on IoT just yet as the two focus on grabbing away subscribers from Verizon and AT&T. In addition to defending their market share, Verizon and AT&T are also trying to identify new sources of growth, Heger said.
Verizon, in particular, has made deal-making a big part of its strategy to do exactly that. In its efforts to tap into digital media and advertising technology, it has acquired AOL and Yahoo! (YHOO) .
Shares of Verizon were up 1.6% Monday afternoon to $52.67.
"This transaction will accelerate the deployment of large-scale implementations that will drive the digital transformation of cities, universities and venues," said Mike Lanman, senior vice president of enterprise products and IoT at Verizon, in a statement.