After years of little or no activity, telecom mergers and acquisitions (M&A) is on the rise again. According to a Wall Street Journal blog post, telecommunications has actually surpassed financial services as the "busiest" market for M&A.
And you don't have to look too far to find evidence of this trend in both the U.S. and abroad. In the U.S., the major M&A focus through 2009-2010 have been in the independent telco market with CenturyLink (NYSE: CTL), Frontier (NYSE: FTR) and Windstream (Nasdaq: WIN) making the majority of the deals. Seeing their traditional PSTN revenue decline as a result of cable defection and wireless substitution, the independents are finding that they could be stronger if they scale their holdings by buying out other telcos.
No less compelling is the international telecom market. Of particular note is Latin America and Europe. In Latin America, Carlos Slim's move to consolidate his wireless and wireline holdings, while French conglomerate Vivendi successfully bought up fixed line operator GVT. In Europe, the big news was dominated by Cable & Wireless and KPN. After a bitter fight, Dutch service provider KPN finally bought out the rest of wholesale voice provider iBasis and Cable & Wireless conducted a $3.6 billion demerger.
While telecom M&A is now getting a lot of attention lately, it had been declining every year since 2005 after SBC Communications' acquisition of AT&T and BellSouth and Verizon's acquisition of MCI--two of the largest deals in the telecom sector of the last decade--wrapped in 2006. However, all of the ongoing activity with U.S. and international service providers is proof that telecom M&A is on the rise again.
|Major Telecom Deals (2009-2010)|
|CenturyLink||EMBARQ||$5.76 billion in stock|
|Qwest (pending)||$22.3 billion|
|Windstream||Iowa Telecom||$1 billion|
|D&E Communications||$330 million|
|Frontier||Verizon's rural lines||$5.25 billion|
|America Movil||Carso Global Telecom||$24.3 billion|
|Vivendi||GVT||$32.4 per share|
- see this post
Big Three indie telcos strive for identity
Carlos Slim's telecom consolidation dream is within reach
KPN finally gets the rest of iBasis - Top Telecom M&As for 2009