Japan’s Aging Water Infrastructure Poses Risk and Opportunity for X2M
X2M Connect has secured a software development contract with Azbil Kimmon to digitise Japan’s vast water meter infrastructure, marking a strategic expansion beyond its existing gas monitoring services.
- Initial $200,000 contract for 5,000 water meter connections
- Potential expansion to 50,000 meters with additional $225,000 revenue
- Partnership builds on six-year gas monitoring collaboration with Azbil Kimmon
- Japanese water meter market estimated at 60 million units, $100M+ SaaS opportunity
- Supports Japan’s government-led push for water infrastructure digital transformation
Strategic Expansion into Water Digitisation
Australian IoT technology company X2M Connect Limited (ASX – X2M) has announced a significant step into Japan’s water digitisation sector through a new software development agreement with Azbil Kimmon. This move extends a well-established partnership that has, until now, focused on gas meter monitoring services in Japan. The initial contract, valued at $200,000, covers the deployment of smart metering software for 5,000 water connections, with plans to scale up to 50,000 meters, potentially generating an additional $225,000 in service fees.
Japan’s water infrastructure is characterised by an ageing fleet of approximately 60 million mechanical water meters, predominantly managed by local government utilities. This creates a fertile environment for digital transformation initiatives, as the government actively promotes advanced technologies to improve operational efficiency, reduce costs, and address labour shortages.
Leveraging Existing Partnerships and Market Potential
X2M’s CEO Mohan Jesudason highlighted the strategic alignment of this expansion with the company’s broader growth program. The partnership with Azbil Kimmon, a key player in Japan’s metering industry with over 120 years of expertise, is a strong endorsement of X2M’s capabilities. Azbil Kimmon’s development of a “smart meter as a service” business model, which collects and utilises gas and water usage data in the cloud, complements X2M’s IoT platform offerings.
The Japanese government’s Ministry of Land, Infrastructure, Transport and Tourism has been actively encouraging digital solutions to modernise water and sewage systems. This includes predictive maintenance, automated meter reading, and remote leak detection, areas where X2M’s technology can add significant value. The total addressable market for SaaS monitoring services in Japan’s water sector is estimated to exceed $100 million annually, underscoring the commercial potential of this partnership.
Future Growth and Market Implications
The initial contract term spans two years, with the option to extend the service to cover up to 50,000 meters. This phased approach allows X2M to demonstrate its platform’s effectiveness and scalability within a critical infrastructure sector. Success in Japan could also pave the way for further expansion across Asia, where X2M already has a footprint in South Korea, Taiwan, and the Middle East.
For investors, this development signals X2M’s growing influence in the smart metering space and its ability to leverage government-driven digital transformation programs. While the initial contract value is modest, the long-term SaaS revenue potential and strategic positioning in a large, under-digitised market offer promising upside.
Bottom Line?
X2M’s entry into Japan’s water digitisation market marks a pivotal growth phase, with scalability and government backing setting the stage for substantial SaaS revenue gains.
Questions in the middle?
- How quickly will X2M scale from 5,000 to 50,000 connected water meters?
- What competitive pressures exist in Japan’s smart water metering SaaS market?
- Could this partnership lead to similar expansions in other Asian markets?
