IT services, manufacturing digitalisation, battlefield 5G and digital soldier, as well as space technology and drone manufacturing, are among the joint business development opportunities included in the strategic cooperation agreement between Rheinmetall and 4iG.
On 21 November, German defence industrial company Rheinmetall and Hungarian ICT group 4iG held an investors’ day to discuss the cooperation between the two companies, and the different fields and expected results of the partnership. At the event, Gellért Jászai, President and majority owner of the 4iG Group, Péter Fekete, CEO of the group, and Armin Papperger, CEO of Rheinmetall, presented plans and objectives.
The cooperation between the two companies is based on two aspects: Rheinmetall acquired a 25.1 percent stake in the 4iG Group in March 2022, and the two firms started joint business development in the framework of the strategic partnership.
One area of business development cooperation is IT services.
Rheinmetall AG (49 per cent) and 4iG Plc. (51 per cent) have set up a joint IT company, Rheinmetall 4iG Digital Services,
through which they provide information technology services to external and internal customers. The plans include 4iG providing IT support for Rheinmetall’s production sites and the prospect that 4iG could take over up to 100 percent of the IT services for Rheinmetall’s civil automotive segment by 2028.
The partnership in this field will enable 4iG to ensure the digitalization of Rheinmetall’s production and manufacturing by introducing Industry 4.0 innovations in defence industrial production processes at Rheinmetall’s Hungarian plants and by providing full digitalization services at all the German company’s sites.
The cooperation will cover IoT and 5G private networks in the battlefield, leveraging the 4iG Group’s mobile private network capabilities in dynamic battlefield environments, providing high-speed, low-latency, secure connectivity. The joint business development of defence manufacturing digitization and battlefield private networks is expected to generate €1 billion in revenues for the companies.
The 4iG Group and Rheinmetall will contribute to the digitalization of the defence forces by developing digital soldier, simulation and training systems in Hungary and in certain NATO member countries in the Central and Eastern European region. In this segment, the 4iG Group and Rheinmetall expect to generate revenues of €200-300 million over five years.
In terms of space technology, there are also opportunities in the drone development and satellite markets. with regard to drones, its is intelligence, surveillance, communications and minefield detection that are the key areas where the two companies see possible synergies.
The outsourcing of Rheinmetall’s drone manufacturing capacity to Hungary is also a possibility for the future.
In the field of satellites, satellite connectivity and Earth observation services for EU and NATO member states have been mentioned as opportunities. This is a growing industry with high barriers to entry and high value potential. The two companies aim to gain a significant market share in this area in Europe, which could generate €1.5-2 billion over the next 3-5 years.
‘The launch of the joint venture is not only a demonstration of our commitment to Hungary but will also provide strong support for Rheinmetall’s digital technology capabilities,’ said Armin Papperger, Chairman of the Executive Board of Rheinmetall AG in October 2022. ‘We see significant growth potential in the cooperation with 4iG Plc, especially in the case of the joint venture that has just been established. We are committed to a strong and fruitful cooperation that will provide outstanding benefits for both Rheinmetall and 4iG’, he continued.
According to 4iG’s prior statement, the strategic cooperation between the two companies, which was launched in early 2022, will bring together the companies’ technological and regional strengths, as well as their shared growth vision, to provide significant support for each other. Rheinmetall is a leading player in the defence industry, where demand for IT competencies is steadily growing, and the Düsseldorf-based company is a strong player in Western European markets—factors that provide 4iG with potential growth opportunities. At the same time, Hungarian ICT group 4iG, is a leading player in the IT industry, has a strong presence in the Central and Eastern European markets, which represent a key growth area for Rheinmetall.