X2M Connect Expands into Middle East with New Licensing Agreement
X2M CONNECT LIMITED (X2M) Share Update August 2024 Sunday 4th
X2M Connect Secures Licensing Agreement in the Middle East
Australian IoT technology company X2M Connect Limited (ASX:X2M) has announced a significant step in its global expansion strategy by securing a 10-year licensing agreement with Dicode Technologies LLC for its 'Vision by X2M' platform in the Middle East.
Instant Summary:
- X2M Connect signs a 10-year Term Sheet with Dicode Technologies LLC.
- Dicode Technologies LLC to exclusively use X2M’s 'Vision by X2M' platform.
- Dicode will provide 'Metering as a Service' to gas utilities in the UAE.
- X2M anticipates around A$0.4 million EBITDA per annum for every 100,000 smart devices installed.
- Significant market opportunity in the UAE and broader Middle East.
- Dicode Technologies LLC plans to expand beyond the UAE.
Agreement Details
X2M Connect Limited has signed a Term Sheet with Dicode Technologies LLC to license its 'Vision by X2M' platform for the Middle East, starting with operations in the United Arab Emirates (UAE). The agreement spans 10 years and mandates that Dicode exclusively use X2M’s platform for their 'Metering as a Service' offering to gas utilities in the UAE.
The partnership between X2M and Dicode began in January 2024, focusing on opportunities in the Middle East. The UAE was selected as the initial entry point due to its mandate for smart gas metering in new piped gas installations.
Market Opportunity
With a population of 10 million across 2.5 million dwellings, the UAE presents a considerable market opportunity. The country has over four million water and electricity meters and approximately 500,000 piped gas connections in Dubai alone. The UAE Government's mandate for piped gas in new buildings further underscores the potential for growth.
Dicode’s 'Metering as a Service' is new to the Middle East, and the company plans to establish subsidiaries in each country of operation beyond the UAE. The broader Middle East market, including countries like Saudi Arabia, offers additional opportunities with millions of dwellings and a growing need for utility digitization.
Financial Projections
X2M Connect anticipates earning around A$0.4 million EBITDA per annum for every 100,000 smart devices installed on the 'Vision by X2M' platform. The revenue structure includes upfront charges for platform access, annual per instance licensing fees, annual per device monitoring fees, and additional charges for customization and support services.
The agreement is expected to provide the digital infrastructure needed for smart city initiatives, enabling seamless two-way communication between property, industry, and government organizations.
This agreement is a strategic milestone for X2M Connect, marking its entry into the Middle East market. The exclusive use of its platform by Dicode Technologies LLC is likely to drive significant revenue growth and strengthen X2M's market position. The anticipated EBITDA of A$0.4 million per 100,000 devices installed indicates a high-margin opportunity.
Given the UAE's mandate for smart gas metering and the broader market potential in the Middle East, X2M's stock is likely to see positive movement as investors recognize the long-term growth prospects.
Investor Reaction:
Analysts are expected to react positively to this announcement, given the significant market opportunity and the strategic alignment with X2M’s global expansion goals. The high-margin nature of the agreement and the exclusive use of X2M’s platform by Dicode Technologies LLC are likely to be viewed favorably.
Conclusion:
Investors should closely monitor the execution of this agreement and the subsequent market expansion efforts by X2M Connect. The company's strategic move into the Middle East could provide substantial growth opportunities and enhance shareholder value.