Vodafone builds on IoT with secure transaction joint venture

Vodafone has set up a new ‘Economy of Things’ joint venture with the Japanese conglomerate, Sumitomo. Their aim is to capture business from securing financial and data transactions between machines, starting with the automotive sector.

Sumitomo’s investment will give it a 20% stake in the venture, with Vodafone holding the remaining 80%. However, the shareholding structure will alter if the companies succeed in their stated aim of bringing on board additional investors.

Vodafone first announced its Economy of Things platform, which draws on its Internet of Things technology and associated Digital Asset Broker (DAB), in February 2022. The choice of the word ‘economy’ points to what makes the platform different to IoT, namely the ability to secure the transfer of payments and data between things.

According to Vodafone, which will transfer DAB to the new business: “Customers can use the platform to assign a unique digital identity to any device. This enables it to seamlessly communicate and transact securely with other devices using blockchain technology where … wallet and payment services are secured by the mobile SIM controlled by the user.”

As we show in our upcoming IoT report, the European and African telecoms group is the largest IoT operator outside China, with revenues of €900 million (about $985 million) in the year ending March 2022 and one of the few to break out its IoT revenues. Vodafone’s focus – in terms of delivering full IoT solutions – has been the automotive and insurance sectors.

Vodafone and Sumitomo initially plan to target the automotive and transport industries in Germany and UK with their Economy of Things platform. Electric vehicles and charging units are some of the machines and devices Vodafone initially foresees benefiting from the secure exchange of money and information without human intervention, but “with the owner in full control.” Longer-term, they are also looking at how to apply DAB to smart cities in Asia. It's not the first time Vodafone and Sumitomo have worked together internationally: In November 2020 they announced a strategic alliance, which resulted in the creation of Safaricom Ethiopia, owned by an international consortium including Vodafone and Sumitomo, among other partners. 

The deal, which is subject to regulatory approval, follows Vodafone’s statement in its annual report in June 2022 that it is in the process of splitting off its IoT division.