Verizon Communications has steadily been building its Internet of Things (IoT) business through acquisitions and investments and may soon top $1 billion in annual revenue from IoT.

Speaking at the Wells Fargo Technology, Media & Telecom investor event this week John Stratton, Verizon executive VP and president of operations, said the company’s IoT business was $217 million in the third quarter, a 24 percent increase year-over-year. “It’s approaching a billion-dollar business,” Stratton said, noting that the majority of that business is coming from telematics, which relates to connected vehicles.

The company just closed on its $2.4 billion acquisition of Fleetmatics Group, which became part of the Verizon Telematics business. In July it closed on its acquisition of Telogis, which helped increase the company’s telematics capabilities for enterprise customers. Plus, Verizon in September purchased Sensity Systems, a provider of IoT solutions for smart cities.

Stratton added that IoT is a very efficient use of the company’s network because the IoT traffic riding over the network only accounts for 7 percent to 10 percent of the connection layer. “It has great margin potential,” Stratton said, noting that even though some IoT devices result in less than $1 per month in average revenue per user, it is still a “very profitable” business.

Verizon competitor AT&T also has been investing heavily in the IoT business, however the company hasn’t revealed how much revenue it makes from IoT per quarter. The company has said, however, that it has about 26 million connected devices on its network and is connecting new devices at a rate of about 1 million per quarter.

Beyond IoT, Stratton also said that the company’s pending $1.8 billion acquisition of XO Communications, which is still under regulatory review by the FCC, will provide an important component to the network — metro fiber rings in the top 40 metropolitan areas. Those fiber rings will aid in Verizon’s deployment of 5G because the fiber will be necessary to backhaul the traffic from the wireless network to the switch

“Where I’m deploying the wireless network, and densifying it, fiber is a big deal,” Stratton said.