Telecom vendor consolidation has been continuing at a healthy pace since AT&T's 2006 acquisition of BellSouth--which signaled a shift in the telco universe toward fewer carrier customers and (probably) less telco capex for the time being. Now, comes rumors of two more possible deals. 3Com supposedly has drawn acquisition interest from parties that include private equity firms and Nortel Networks. Meanwhile, another report suggested Huawei may be interested in acquiring Carrier Access Corp.
The 3Com possibility is intriguing in part because if it ends up in private hands, it would follow not long on the heels of the acquisition of 3Com competitor Avaya by a private equity firm. Private equity money has been flowing into public telecom vendors and service providers of late, with Alltel having agreed to be bought by Goldman Sachs and TPG Capital, and Bell Canada being the target of a private consortium.
What's less clear is how privatization may change these firms. Will the PE guys strip-mine the firms' cash flow resources to realize big, but short-term margins, or will they actually invest to create more long-term value for another eventual sale or spin-off?
For more about the 3Com rumors:
- read this blog entry from The Wall Street Journal (Sub. req.)
For speculation on Huawei's potential interest in CAC:
- check out this Light Reading blog entry