LONDON, July 23,
2024 /PRNewswire/ -- Communications service
providers (CSPs) have experienced substantial consolidation in
recent years with 514 mobile and wireline M&A deals worldwide
over the 2019-23 period, Omdia's research shows.
There have been more wireline M&A deals than mobile, with
392 wireline and 122 mobile M&A deals over the 2019-23 period.
The mobile M&A includes prominent deals such as the planned
merger of the Vodafone and Three operations in the UK, which will
create the UK's second-largest mobile operator by subscriptions if
it is approved by the Competition and Markets Authority.
There were 214 M&A deals
across all communications provider sectors in 2023, down from a
high within the past five years of 316 in 2021, a decline that
reflects factors such as high interest rates and a cyclical
downturn in the technology industry.
But the dynamics of the telecom market mean there will
continue to be a strong drive for further M&A among CSPs. "With
revenues in the telecom sector growing at a low rate while markets
are competitive and increasingly mature, many more CSPs will seek
consolidation, so that they can cut costs by eliminating
duplication and invest in network technologies such as fiber and 5G
to propel growth in their connectivity business," said Matthew Reed, Chief Analyst, Service Providers
& Markets, at Omdia.
"Merging also allows operators to benefit from other economies
of scale including increased competitiveness against other big
players, opportunities for cross-selling, and more clout in
procurement."
In addition to consolidation, telecom operators are undertaking
M&A as part of delayering and diversification strategies.
With delayering, CSPs typically sell infrastructure assets such
as telecom towers to raise funds to reduce debt or to invest in
other business areas. In July, Telecom Italia (TIM) completed the
sale of its fixed-line business in Italy to investment group KKR, which TIM said
will allow it to focus on growth through the launch of new
beyond-connectivity consumer services and enterprise ICT services.
Also, CSPs are making acquisitions in high-growth technology
sectors for diversification, with both Orange and Telefónica having
built up significant cybersecurity businesses in this way.
"For telecom operators that want to become technology services
providers, one way to make that transition is to buy companies that
already have the capabilities and customer base in the target
sectors," said Reed.
Notes
Chart shows M&A across the communications provider sector
including infrastructure, media, technology and wholesale companies
as well as CSPs.
ABOUT OMDIA
Omdia, part of Informa Tech, is a technology research and
advisory group. Our deep knowledge of tech markets combined with
our actionable insights empower organizations to make smart growth
decisions.
Contact: Fasiha Khan –
Fasiha.khan@omdia.com
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SOURCE Omdia