$67m buy beefs up Telus’ smart-home security plans

Telecom’s AlarmForce deal aimed at integrating security in connected-home network

Telus says its acquisition of AlarmForce's Western Canadian assets fits into its broader smart home strategy | Shutterstock

Telus Corp.’s (TSX:T) Blair Miller likes to think of his company’s recent acquisition of AlarmForce as a kind of “accelerant” for its smart-home strategy.

“We could build this stuff from scratch or we can take an existing company with an existing solution, and this affords us an opportunity to move in,” said the telecom company’s vice-president of consumer products and content.

“So for us this is an accelerant.”

In January, Vancouver-based Telus paid $66.5 million to acquire AlarmForce’s assets and its 39,000 customers in B.C., Alberta and Saskatchewan.

Bell Canada’s parent company, BCE Inc. (TSX:BCE), also shared an interest in AlarmForce.

It closed its own deal in January to acquire the security company in a $182 million deal.

Telus subsequently acquired AlarmForce’s western Canadian assets for what it described as a “proportionate share of the value of the Bell transaction.”

The company said the acquisition fits into its broader plans for security products and services as part of a line of smart-home technology offerings.

Smart-home – or connected--home – technology allows residents to remotely control functions such as lighting, heating and security.

For example, lighting controls would be connected to the internet and residents could in turn monitor and control their home’s lighting through a mobile application while they’re away.

And as internet-of-things-enabled technologies become more prevalent, dishwashers, coffee makers and washing machines are becoming increasingly integrated with smart-home technology.

Telus’ portfolio of smart-home offerings ranges from indoor video monitoring to thermostat controls.

“People pay for security today,” Miller said. “It’s a well-established line of business. And of course we’re interested in new lines of business for the home that can build off and leverage the competencies that we have.”

Telus announced in October 2015 it was investing $1 billion over five years to connect 400,000 homes and businesses to its fibre optic network, offering speeds of up to one gigabit per second.

Miller said AlarmForce’s security systems are a good match for a telecom company that has a strong network to match.

“Security and surveillance has always been of interest,” said Brian Pozzolo, owner and president of Moda Smart Homes. “On new homes it’s almost an automatic: you’re going to get an alarm.”

He said the market for smart homes has been exploding over the last decade, sparked by the do-it-yourself appeal of the technology.

But Pozzolo added consumers are running into problems with smart-home providers that will hire a contractor to install devices while the company takes responsibility for the programming.

 “It becomes difficult because if there’s any troubleshooting, they’re not going to know where to start,” Pozzolo said.

Telus’ acquisition of AlarmForce would sidestep that problem since one company is responsible for both the network and the system and devices that are installed, he said.

Meanwhile, Miller said, Telus will also be able to offer services to customers who are not interested in a full security system.

Down the road, he said, the telecom company could offer individual products such as a remote security light that is integrated into the larger smart-home network.

“This is a significant area of investment for us. As you can tell, we don’t undertake acquisitions lightly,” he said. “It’s a very exciting line of business and one we intend to double down on from an investment perspective.”