Japanese conglomerate Hitachi cleared the final regulatory hurdle for its rail subsidiary to go forward with plans for a €1.7 billion acquisition of France-based Thales Ground Transportation Systems. GTS includes the Thales fare-system supplier business. The Japanese conglomerate, however, has not said what it plans to do with Thales RCS, a major fare-system supplier.
Thales said its fare-system unit had sales of €190 million (US$200.2 million) in 2016 and a headcount of 850 globally.
Japanese conglomerate Hitachi this week cleared the final regulatory hurdle for its rail subsidiary to go forward with plans for a €1.7 billion (US$1.8 billion) acquisition of France-based Thales Ground Transportation Systems. GTS includes the Thales fare-system supplier business.
But Hitachi has said little so far about what it plans to do with the fare-system business, outside of vague references to helping Hitachi with its mobility-as-a-service, or MaaS, offer.
The business, sometimes called Thales Revenue Collection Systems, or RCS, is a major fare-payments and ticketing supplier, with projects in the Netherlands, Denmark, New Zealand, Qatar, France, Hong Kong and elsewhere.
The unit, however, makes up a relatively small part of Thales GTS, which Hitachi Rail is mainly purchasing for Thales’ rail-signaling business. (Thales’ banking and fare smart card business, part of its Digital Identity & Security (DIS) division, which it acquired with its €4.8 billion purchase of France-based Gemalto in 2019, is staying with Thales Group.)
A Hitachi Rail spokesman in the UK told Mobility Payments Thursday that he could not comment yet on the company’s plans for the Thales fare-system business–or the rest of Thales GTS, for that matter: “We are in an advanced stage of the acquisition, but it is not complete yet, and we have to respect the process,” he said. Hitachi plans to finalize the acquisition during the first half of 2024.
In a press conference in mid-2021 to announce the planned deal, a Hitachi executive who oversaw the company’s mobility business, reportedly said that Thales GTS’ fare-collection systems business, including road toll charging and parking payments, has “huge potential for expansion into mobility as a service.”
Hitachi launched a MaaS trial in Genoa, Italy, last year, which the company said uses technology to collect fares in user accounts, enabling them “to use a single platform to access various transportation systems, including subways, buses, elevators, parking lots, and taxis.” Hitachi said its platform also supports a Bluetooth-based be-in, be-out, or BIBO, ticketing system.
But MaaS has so far failed to take off. And Hitachi appears to have little other fare-payments technology. The company did say that through its Hitachi Payment Services subsidiary, its open-loop “solution” was implemented in India for metros in Noida and Nagpur. The implementation supports India’s National Common Mobility Card initiative. Hitachi’s payments subsidiary appears to mainly manage an ATM network in India.
Hitachi is expected to continue to operate the Thales RCS business as before for the time being after the acquisition closes. It remains to be seen what the Japanese company plans to eventually do with the business.
It could keep RCS intact and increase funding for R&D, allowing the unit to make enhancements to the back office, noted one industry observer. The back office appears to be one Thales fare product in need of a refresh, and failure by Thales to do this earlier may have cost the vendor some business.
For example, Thales is providing validators and other hardware for closed- and open-loop fare payments to the three largest public transit operators in the Netherlands, including the country’s largest PTO, Dutch national railway, NS. But it is not believed to have sold the agencies on its back-office technology for these projects, including for the nationwide rollout of open loop, known as OVpay.
Another option for Hitachi would be to sell the Thales fare-system business. Depending on the price, it might find willing buyers among such Thales competitors as Cubic and Conduent, both based in the U.S.; and Spain’s Indra.
Thales, in fact, tried to divest its ticketing business six years ago, ending exclusive negotiations with private equity firm Latour Capital in 2017. In an announcement that the deal was off, Thales said only that “Latour Capital has concluded that this business is not aligned closely enough with its investment priorities.”
At the time, Thales said its fare-system unit had sales of €190 million (US$200.2 million) in 2016 and a headcount of 850 globally.
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