Conduent to Part with Its Transportation Business Unit, Including Fare Collection

U.S.-based Conduent, a business services outsourcing company, said it would sell or spin off its transportation business unit, a major automated fare-collection system supplier globally.

Conduent said in a statement it believes it can “maximize shareholder value” by separating the transportation business from its commercial and government services segments, which includes outsourced medical billing and management and processing of government benefits.

The company also said it believes its transportation business, which includes a large road-tolling systems operation, as well as parking, follows different economic trends and has a disparate customer base and growth profile from the two other segments.

The transportation business is the smallest of Conduent’s three business units, accounting for just under 18% of $4.1 billion in revenue last year. The unit had $746 million in sales for the year, up nearly 3.8% from 2020–the only company segment that saw an increase in sales in 2021.

That is believed to be largely due to the return of Conduent’s tolling business following the Covid slump of 2020. Conduent said it operates six out of the 10 largest toll systems in the U.S., including those in New York, California, Florida and New Jersey. The tolling business began to pick up substantially in March 2021, said the company.

Transit fare collection is not believed to have fully recovered yet from the pandemic. Conduent provides such technology for transit agencies as back-office systems, including account-based ticketing, and validators for closed- and open-loop projects, among other products. The company says it has transit projects in several countries, including the U.S. and Canada, France, Italy, the Netherlands, Sweden and  Mexico. And as of 2020, Conduent said its fare technology was used by more than 400 large and small transit agencies or networks globally.

Conduent competes with such other fare system vendors and system integrators as Cubic, Thales and INIT. It’s hard to say whether any of them would want to buy the large Conduent unit. Some industry observers believe the unit is more likely to be spun off.

Conduent’s share price has increased by more than 10% since it announced the plans to separate the transportation unit April 7, and was trading at around $5.60 per share in the morning session Monday. That is well below the company’s record high share price of more than $23 in September 2018, nearly two years after the company was spun off from its original owner, Xerox.

Among Conduent Transportation’s transit project wins the past several months is renewal of its long-held contract to manage and maintain closed-loop Opus cards in Montreal and Québec City; providing open-loop technology to the Italian cities of Bergamo and Brescia, east of Milan; equipping three bus lines in Mexico city for open loop; and replacing onboard closed-loop ticketing equipment for buses and trams in Paris, the latter project in partnership with France-based Flowbird.

Conduent is also providing upgrades to the closed-loop Key card along with providing open-loop technology to SEPTA in Philadelphia. The project, however, has been beset by delays and budget overruns.

Conduent said it would continue to operate as a single company until it finalizes its separation plans. It added that the transportation business would “continue to deliver solutions to a large and stable client base of global transportation agencies in more than 20 countries.”

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