Eastern and Central Europe should continue to be busy merger and acquisition territory for telcos, as the industry looks for growth in these mature markets through consolidation, says a new report from global management consultancy Arthur D. Little.
The new report, "Mergers & Acquisitions: Bust or Boom in CEE Telecoms?," argues that high M&A activity will be driven by three factors:
the privatization processes, a new wave of CDMA and WiMAX license tenders, and increasing pressure to consolidate.
And, despite the credit crunch brought on by the U.S. subprime contagion, the major Western European telecom operators that took a brief hiatus in 2007 from an extended buying spree are now likely to resume their acquisitions.
"As market growth slows down, competitive intensity increases, putting pressure on operating margins. ... telecommunications operators in Eastern Europe will face increasing pressure to consolidate in an ambition to realize cost savings or to simply take a competitor off the market," said report co-author Christian Niegel. "Operators that are currently benefiting from many years of strong revenue growth will start to feel the pressure to realize savings by taking over others. We can therefore expect a new wave of cross-border and intranational mergers in Eastern Europe, as we have been observing in Western Europe for several years already."
See the release
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