Communications Industry: On the Verge of Massive Consolidation

Spectacular change by 2020?

In the recent past, the communications industry has been announcing several M&A initiatives at an unprecedented pace, with a mix of both large multi-billion dollar deals, and smaller operations. We – as many of our peers – anticipate that by 2020 the global communications services providers (CSPs) landscape will see a spectacular change.

Global Telecoms Insights: Operators Consolidation in Europe, Challenges & Opportunities

On the verge…

Major transformations have been frequent occurrence for the Telecom industry over the past 10-15 years around the Globe, and this will likely continue. Telco’s have to, and will continue to, engage into drastic transformation plans to simplify, rationalize and modernize both their business and their IT. Operators in Europe are doing that in the same way as their peers in other part of the Globe, but, in addition, the Telecom Industry in Europe has started to engage into a major Operators consolidation. This is going to heavily impact all players in the Industry, not only the Operators themselves, but the entire eco-system.

Consolidation as a Strategy to Overcome Challenging Market Conditions

With the focus on minimizing costs to reduce impact on margins, operators will be increasingly inclined towards consolidation as a strategy to overcome challenging market conditions:
  • Acquisitions: Mobile operators in Europe are looking to augment their service offerings by acquiring fixed line or cable operators
  • Regulations:  In a highly regulated sector like telecom, regulators have naturally a strong impact on long term directions of the sector.
  • Revised M&A guidelines: European telecom operators continue to discuss with regulators the merits of greater scale for profitable rollout of network upgrades and improved services that will ultimately benefit the consumer
  • IT Infrastructure consolidation: M&A deals bring significant IT challenges for telecom operators, as it can be difficult to integrate back-end, customer-facing, and operational and business support systems, throughout merged organizations

Exciting Times Ahead

The past 10 years have been very exciting for the Telecoms industry.
 
Now, the impending European Commission regulations regarding telecom M&A, spectrum policies and infrastructure sharing will reshape the region’s industry landscape, with fewer but stronger CSPs.