By Brenda Bouw, The Canadian Press

VANCOUVER - WebTech Wireless Inc. (TSX:WEW) is gaining market credibility after a long-awaited deal with a major U.S. courier company, but analysts say the vehicle tracking and telematics services provider will need to keep the contracts coming to hold investor faith.

Vancouver-based WebTech hasn't yet named the companies involved in the agreement, but they are believed to be industry heavyweights FedEx Corp. (NYSE: FDX) and distribution partner International Business Machines Corp. (NYSE:IBM).

Both FedEx and IBM are expected to officially announce the agreement as early as Monday.

WebTech, which has been promising this particular hardware, software and services supply agreement for more than two years, said it beat out industry giant Qualcomm Inc. (NASDAQ:QCOM) for the contract.

The deal is for 7,800 locators and analysts estimate it to be worth about $5 million per year over the five years. It is also expected to bring more business from FedEx, and possibly other major industry players, in the future.

"This particular contract graduates them to a totally different level," said Dev Bhangui, an analyst with Haywood Securities.

"It places them on the radar screen for a number of multinationals looking for efficiencies, especially during these tough times."

Vehicle tracking services can help companies keep tabs on their employees and shipments and avoid problems such as traffic tie-ups and other delays. The result not only improves productivity, but saves money on gas. FedEx recently said high fuel prices were partly behind its first-quarter loss.

Bhangui said the only risk is executing the deal, something WebTech has had trouble with in the past.

Last spring, a deal WebTech had to equip some Volkswagen cars in Brazil with its vehicle monitoring services fell through after one of the companies involved in the agreement couldn't secure the proper financing.

In May, WebTech's stock sank from above $7 to less than $3 on the Toronto Stock Exchange, where it had graduated to from the junior TSX Venture Exchange the month before. It hit a 52-week low of about $2 in January and has been steadily increasing since.

When the major courier company deal was announced Wednesday, the stock rose more than three per cent to $3.78, the same day the market lost more than 400 points.

On Friday, the shares closed up two cents at $3.62.

Nick Agostino, an analyst at Research Capital who has a "hold" on the stock and 12-month price target of $4, said while the contract was good news for WebTech, but he was waiting for larger deals to come through before changing his view.

In particular, analysts are watching the rollout of a pilot project WebTech has with Mexican insurance company GNP to provide location services for its automotive and fleet policy holders.

"I need to see that pilot turn into a full blown contract to give me more comfort on my current estimates," Agostino said. "I think the stock is suggesting the same thing."

Anwar Sukkarie, WebTech's co-founder and chief executive, said the new courier contract is just one of many he hopes to announce in the coming months.

"Our resilience after what happened last year with in Brazil (with Volkswagen) showed what this company is made of," Sukkarie said.

"It showed what we can actually accomplish and do and this last one is just the beginning."

Sukkarie founded the company in 1999 with its chief technology officer Cameron Fraser, both former Motorola executives. The company provides hardware and services that enable fleet vehicle tracking and management.

Sukkarie said his goal is to beat out Wireless Matrix Corp. (TSX:WRX) to be the largest telematics company in Canada, based on revenues, by the end of the year.

He is also planning to grow the company by acquisitions in the years to come.

"I believe this is an industry that is going to consolidate, we would like to be the consolidator," said Sukkarie.

And, in his "far-stretch dream," he'd like to someday grow WebTech to a billion-dollar company. Its current market value is about $208 million.

"We are going to take it one step at a time, solid steps, and grow organically in the foreseeable future and grow through acquisitions in the future, but not this year."

In the third quarter of its 2008 financial year ended April 30, WebTech reported record revenue of $6 million and a net loss of $1.9 million.