It would seem that with the ongoing credit crisis taking place that telecom M&A activity would have been dead or nonexistent in 2009, but nothing could be further from the truth.
I would place this year's M&A activity into various distinctive holiday baskets:
- Tier 2 ILEC consolidation began: After years of seeing the RBOCs buy one another up and then the last IXC in MCI, the first shot of the tier 2 ILEC consolidation trend was heard last fall when CenturyTel bought out the former EMBARQ. Windstream, the most conservative of the bunch has been, as Dan O'Shea suggests, eating small portions in preparation for a bigger meal by snapping up three ILECs and a CLEC. No doubt, the biggest tier 2 merger, or rather a tier 2 buying ILEC assets, is Frontier's pending purchase of Verizon's rural lines.
- Hoaxes/Rumors: There were plenty of M&A hoaxes in 2009. The first hoax emerged last Spring when a rumor surfaced that Qwest was going to sell off its long-haul network. And after speculation ran rampant on the possible bidders, Qwest apparently felt they were being low-balled and took it off the market. Following the carrier rumor mill, a report says that Reliance is selling off the former Yipes and FLAG Telecom. On the vendor side, Alcatel Lucent would get bought out by the ever-aggressive and savvy Huawei.
- KPN/iBasis come together: A notable deal across the pond was Dutch carrier KPN's move to get the remaining stake in Burlington, Mass.-based VoIP wholesaler iBasis. After iBasis and KPN tussled over the sale price and even filed litigation, the Dutch company finally got its desire when it put the right offer on the table for iBasis.
- Bargain sales: Who can forget Nortel's ongoing bargain basement sale of '09 where Ericsson and NSN tussled for the Canadian company's CDMA/LTE business. But on the wireline side, Nortel's prized optical and MEN division went to Ciena for a cool $769 million.
- Comcast beefs up business: Maybe not the largest M&A announcement this year, but with its cable brethren Cox and TWC gaining increased momentum in business, Comcast put a bid for Cimco to bulk up its business services muscle.
- Bye, bye Next Level Communications: After buying the remaining stake in Next Level Communications, Motorola finally decided this year that it was time to sell off the unit to the telecom junk yard otherwise known as CTDI.
Okay, telecom M&A may not have seen the billion dollar returns of the late 1990s or early 2000s when you'd see the big boys like the old Lucent or Nortel snapping up hoards of startups that had little than an idea for billions, but there was still plenty to watch in 2009.
So as you get ready to hoist another cup of eggnog and figure out why some of the Christmas lights aren't working, I invite you to take a look at Part 1 of our Top 10 M&A in Telecom feature and let us know what you think.
--Sean
