FORUM: M&A in the telecommunications sector


Financier Worldwide Magazine

June 2018 Issue

FW moderates a discussion on M&A in the telecommunications sector between Mathias Elspass at Clifford Chance, Sandeep Mehta at J. Sagar Associates, Daniel Francisco Di Paola at Marval O’Farrell & Mairal, Oliver Stacey at Norton Rose Fulbright LLP, and Michael J. Young at Reed Smith LLP.

FW: How would you describe M&A activity in the telecommunications sector over the last 12-18 months? What do you consider to be the key deal drivers?

Elspass: The North American market has seen a series of significant M&A transactions in the telecommunications sector. Verizon was involved in some of the largest transactions in 2017. The most recent was the acquisition of the operating business of Yahoo. Verizon combined the acquired assets with its existing AOL business to create a new subsidiary, Oath, a diverse house of more than 50 media and technology brands. And only recently, Verizon’s US competitor T-Mobile agreed to merge its business with Sprint. Europe moved at a slower pace compared to the North American market, in particular with regard to operators of telecommunication services. Deals like CK Hutchison’s attempt to acquire O2, which was blocked by the European Commission, and the cleared joint venture of CK Hutchison and WIND in Italy remain exceptions. There was higher activity in relation to telecommunication towers and other infrastructure, such as KKR’s investment in Telefónica’s infrastructure operator Telxius. The stricter stance of competition authorities on in-country consolidation may have slowed down activity. For instance, the competition authorities closely monitored the takeovers of the German cable network operators Unitymedia and Kabel BW by Liberty Global for approximately €6.7bn. Currently, Vodafone is negotiating a possible acquisition of Unitymedia with Liberty Global, a landmark deal in the sector.

Di Paola: M&A in the telecommunications industry has been very active during the last 12 to 18 months. As of 2016, we have seen increasing purchasing activity by companies providing different telecommunications services. In particular, investors have looked for companies that have an important fibre optic network deployed in profitable areas. Likewise, several worldwide, well-known providers of passive telecommunications infrastructure have been landing in the Argentinean market to collaborate with mobile service providers to expand the number of cell sites and meet their commitments with the regulator, the National Entity of Communications (ENACOM), to develop 4G coverage within Argentina.

Young: Increased levels of regulatory oversight, a shrinking pool of traditional players and the pace of technological change mean that M&A activity in this sector has been somewhat erratic. The arrival of the internet and more recently cloud computing has generated a new breed of digitally native, over-the-top services (OTT), which continue to eat into the conventional operators’ traditional sources of revenue. Acquirers have been forced to become more imaginative and resourceful. The times when consolidation that delivers cost savings and efficiencies was the sole driver are over. Many players have, instead, pursued small bolt-on acquisitions driven by a desire to capture new talent, products or IP, boost organisational agility, shorten time-to-market and enable implementation of data analytics.

Stacey: There has been considerable activity and interest in the telecoms infrastructure space over the last 12-18 months, driven by the increasing consumer demand for data. Valuations are healthy and in addition to operators being active in this space, it is emerging as an interesting asset class for traditional PE investors, as well as operators and infrastructure funds. Telecoms infrastructure encompasses fibre, cable and towers, as well as data centres. The recent drivers of growth and valuation expectation look to continue, fuelled by a continued consumer demand for data and the need for operators to have credible converged and quad play offerings. In the case of tower M&A activity, a few different drivers seem to be in play. From the perspective of the operators, these processes are either driven by a need to support the balance sheet and de-lever, for example Altice’s current proposed disposal of its French and Portuguese towers, which has attracted considerable interest from the tower investment community, or by the need to realise cash to invest further capex in a particular market. From the investors’ perspective, PE and infrastructure funds see valuations as favourable and it is a good time to go to market with infrastructure processes, particularly where the fund may have been sitting on the asset for the requisite holding period.

Mehta: The Indian telecommunication industry has experienced an unprecedented wave of consolidation over the past year. The consolidation was in part due to the need for a larger share in spectrum for offering 4G data services, the inability of smaller players to cope with high spectrum costs, the stiff competition posed by new entrant Reliance Jio Infocomm Limited, and prolonged tariff wars to sustain and acquire subscribers. In 2017, mergers and acquisitions in the Indian telecommunications sector were valued at over INR 955bn, reflecting a more than five-fold jump from the aggregate deal value of around INR 175bn recorded in 2016. The majority of the transactions recorded in 2017 were domestic in nature.

Traditional operators have been under pressure to explore and create offerings that would enable them to reposition themselves in the market.
— Michael J. Young

FW: Have any recent deals in this space caught your eye? What do they tell us about the market?

Di Paola: During the last few months, US private investment funds have acquired medium-sized national telecommunication companies, confirming the current interest in the local telecommunications market. Special mention must be made of the merger between Cablevisión, the main cable operator in Argentina, and Fibertel, one of the main local ISPs, both companies belonging to the Clarín Group, the largest media group in Argentina, with the company Telecom Argentina, one of the incumbent historical providers and controlled by Fintech Group. As a result, the most important telecommunications company in the local market has been created, with the capacity to offer quadruple play services. In parallel, the control authorities have eliminated certain regulatory restrictions allowing incumbent and mobile service providers the possibility of offering pay-TV services, although excluding those provided by satellite link. A brief law is currently under debate in the Argentine Congress, which covers, among other issues, the possibility that these providers may also provide pay-TV services by satellite link. Additionally, the bill includes the obligation of public utilities companies and those of telecommunications to provide access to facilities such as poles and pipelines, to enable the deployment of networks by third-party telecommunications providers. The current administration intends to boost the expansion of the existing telecommunications infrastructure, both mobile – through the reallocation of services in frequency bands – as well as fixed 15-year protection in favour of those companies that deploy new generation fibre optic networks, so as not to give access to third-party providers to the last mile subscriber loop.

Young: Traditional operators have been under pressure to explore and create offerings that would enable them to reposition themselves in the market. Many have decided to foray into areas which are beyond their core competencies. They made big bets by seeking to complement their distribution networks by scooping up exclusive sports rights and content-generating businesses. Many major telecoms players including Verizon, Telefonica and BT are already heading down this path. This represents a dramatic shift from being the ‘dumb pipes’ utilised by other media and tech companies, to becoming utilities for content that captivates audiences across the world.

Stacey: A number of deals are worth focusing on as they provide a useful insight into drivers and how different operators view future opportunities in the sector. Clearly, the ongoing discussions between Vodafone and Liberty on any potential transaction, and how Deutsche Telekom will react, will be compelling to follow. The recent disposal by a number of Scandinavian operators of assets outside core markets advances a theme that operators continue to look to rationalise portfolios where it makes sense, to refocus on core markets and reassess strategy. We are seeing a number of operators looking for opportunities which may arise, either to dispose of an asset in a non-core market or to consolidate with another operator and roll the dice again to see if the reshaped business in a better market can deliver results. Coupled with this, recent activity in the telecoms infrastructure space which is attracting considerable interest, such as EQT’s proposed disposal of various portfolio companies, means this part of the sector should see lots of activity in the near future.

Mehta: The merger of Idea Cellular Limited and Vodafone India Limited is India’s largest telecommunication operators’ merger. Both companies are struggling to compete with the aggressive strategies of Reliance Jio. The merged entity is expected to be a potentially stronger competitor than either of the companies individually and have the highest revenue and market share in the telecom industry. The financial strength of the merged entity will allow it to make capital expenditure in line with the other players in the sector and pare debt from operational synergies. The acquisition of the loss-making Tata Teleservices Limited and Tata Teleservices Maharashtra, on a debt-free and cash-free basis, by Bharti Airtel Limited in 2017 was also a significant deal. The deal may be perceived as an outcome of the turbulent Indian telecommunication industry, causing small players to exit or merge with the bigger players. Airtel is also in the midst of acquiring Norwegian telecom operator Telenor ASA’s local arm, Telenor (India) Communications Private Limited. The acquisition is expected to increase Airtel’s subscribers and strengthen Airtel’s market share in states across India.

Elspass: So far there is still plenty of smoke but little fire in European telecoms M&A, but deals between Vodafone and Liberty Global are at the gates. The telecommunication sector in most European countries is divided into several national markets, which are serviced by a number of different operators. We are not expecting this basic structure to change significantly in the foreseeable future. We would expect stronger activity in countries such as Germany, in which an increasing need for network roll-out meets the political drive to action expansion plans.

FW: Have there been any jurisdictional hotspots for telecoms M&A? What does this signal in terms of growth opportunities?

Young: The North American market continued to dominate the headlines with a flurry of M&A activity, both in terms of deal volumes and values. Last year saw, for example, the bidding war between Verizon and AT&T for Straight Path Communications. The communications assets company was finally secured by Verizon for almost double the initial offer, over $3bn. The end of the year brought CenturyLink’s acquisition of Level 3 which came with a hefty price tag of $34bn. North America is likely to remain a headline-making hotspot for telecoms activity, followed by Asia Pacific and Europe. Many regulators will be resistant to further in-market consolidation but even then, telecom companies are likely to pursue regional as well as global targets that will often continue to redefine what it means to be a communications operator.

Stacey: It is hard to select a particular jurisdiction as a hotspot. India, the US and the EU have seen reasonable activity, as have other markets. However, compared to recent years, Africa has been relatively quiet over the last 12-18 months. There are a number of reasons for this, including geopolitical factors, which stretch beyond the sector itself. With one or two exceptions, investors are cautious about new markets and new acquisitions on the continent. The wave of tower acquisitions we have seen over previous years has slowed to a trickle over the last 18 months, and the proposed IPOs of the leading towercos seem to be potentially on hold.

Elspass: Unlike the US, we do not see any particular local hotspots for M&A in Europe. We would expect that activity across Europe will pick up and investors should therefore keep an eye on European markets.

Mehta: The merger of Vodafone and Idea has elevated in terms of deal value in India on the global M&A list in the telecom industry. The key drivers for M&A in the telecommunication sector in India are consolidation and in-market convergence, as operators seek higher market share. However, operators continue to seek innovative assets and smaller deals that can fill gaps in their portfolios.

Di Paola: We estimate that given the fact that incumbent and mobile carriers in Argentina can now offer quadruple play services following the Cablevisión/Fibertel merger with the company Telecom Argentina, not to mention the existing need to expand the telecommunications networks and offer a good quality service to the end user, it could trigger a number of transactions aimed at financing current medium-sized telco operators through loans or equity. Investments in this sector are intensive and financially significant.

With one or two exceptions, investors are cautious about new markets and new acquisitions on the continent.
— Oliver Stacey

FW: What advice would you give to acquirers in terms of identifying targets with attractive synergies in today’s market?

Mehta: The Indian telecommunication industry has been strained by intense competition which has adversely affected pricing power. Additionally, the high cost of spectrum and rising capex requirements have made it difficult for small and medium players to generate steady cash flows, which have been further strained after the entry of Reliance Jio. With the enactment of the Insolvency and Bankruptcy Code, 2016, many such companies are headed for restructuring under the IBC and are being made available for bidding at attractive valuations. The bankruptcy filing of Aircel Limited is an example of the availability of such stressed assets in the market. It is important for acquirers in the telecommunication sector to keep an eye out for stressed assets which can offer considerable operational synergies and scale benefits, such as reducing overlapping costs including network expansion and marketing, improving spectrum efficiency and improving the bargaining power of vendors.

Di Paola: Usually, investors evaluate ‘target’ telco companies as being attractive based on the degree of infrastructure deployment and its location, as well as the target’s portfolio and its related cash flow. In other cases, the potential to integrate services between different ‘target’ companies is evaluated.

Elspass: Before attempting any form of consolidation, a thorough analysis of the chances of getting the deal cleared by the relevant competition authorities will need to be made. The same applies in respect of the regulatory aspects of joint ventures, in particular if the incumbent operator is involved.

Stacey: In looking at any target acquisition, the key is to identify the critical rationale and drivers behind the transaction and to properly test whether they will bear fruit and remain true, post-acquisition. If the target has attractive synergies and part of the purchase price is synergy related, then it is vital to determine whether the synergies can be achieved. The only way to assess this is through comprehensive and thorough due diligence to ensure that the synergy case stacks up, not only from a financial standpoint, but also a legal and regulatory perspective. There have been many cases where pre-acquisition synergies cannot be achieved post-completion for a variety of market, regulatory and contractual reasons, and so there is no shortcut to properly testing this in advance.

Young: The explosion in cloud computing has also paved the way for a connectivity revolution. Millions of devices embedded in everyday objects are ‘communicating with each other’ by sending and receiving data. This, coupled with the fact that mobile subscription and penetration rates will continue rising, means that demand for data and online engagement via mobile devices will remain high. There will be ample opportunities to cash in on new digital ecosystems and companies which are able to leverage Big Data, consolidate the existing ecosystems and find ingenious ways of making the customer spend more money online, should be on the shopping lists of those looking to acquire.

In general, buyers pursue the necessary financing to satisfy the agreed price.
— Daniel Francisco Di Paola

FW: Are there any recurring themes in the way transactions are being structured and financed?

Di Paola: In some cases, transactions in Argentina’s telecoms market have been introduced by target companies through private tender selection procedures, after a due diligence process. In general, buyers pursue the necessary financing to satisfy the agreed price.

Elspass: Each deal needs to be considered on a case-by-case basis, as in practice much can depend on the local market and the legal framework. There is no pattern across the industry. We have seen a strong appetite for platform investments in the infrastructure space and a number of innovative debt financings for this kind of investment.

Stacey: The model for acquisitions will depend on the market, competitive tension, type of asset and parties involved. There have been a good variety of different structures, including plenty of senior debt, mezzanine and equity finance available for the right assets. In terms of recurring themes, on the telecoms infrastructure side, the well-worn path of a competitive auction process continues with infrastructure and PE parties familiar with typical debt and equity structures and approaches to the transaction documents. For in-market consolidation where two operators are looking to combine their businesses into a JV, the preference is for a cash-less transaction if this can be achieved with various structures used to rebalance any difference in equity values from the combined entities.

Young: In a capital-intensive industry where returns on capital are declining, consolidation has been seen as a sign of a move toward a more rational market structure. Telecom operators are required to continually upgrade their networks and streamline their operations. This has caused carve-out arrangements, spinning out a division into a separate company, to become an integral part of the deal landscape. Non-core assets can be an expensive distraction and M&A activity has become an opportunity to generate liquidity and reinvest funds into strategically important ventures. The war chest for acquisitions will often be supplemented – where cash and shares, or all-stock transactions are not on the table – by bond or term-loan issues which are frequently deployed to refinance existing masses of debt incurred due to network upgrades. The structure of deals may also be affected by the need to prepare regulatory filings and obtain consents. Prudent acquirers build into their deal structures strong contingency arrangements should winning the regulators over involve divesture of any of the network operations or spectrum sales.

Mehta: Transactions in the Indian telecommunication sector are usually structured under the Indian Companies Act, 2013, with the approval of the National Company Law Board Tribunal (NCLT) and Department of Telecommunication, Government of India. In India, there are significantly higher taxes such as stamp duty, goods and service tax on the transfer of business. The NCLT-approved merger is the recognised and popular methodology to structure transactions in the telecom sector. Most transactions have been structured to avoid upfront cash payments as telecom companies have high levels of debt and cannot raise further debt to finance such transactions.

FW: What specific due diligence and transactional risk management challenges exist in the telecommunications sector which acquirers need to address?

Mehta: In India, a prospective telecom service provider investor must first determine whether the target company holds all necessary licences. If the target holds all relevant licences, it still may require DoT approval to transfer such licences to the buyer. Lack of timelines for such approval may result in inordinate delays. Second, in addition to confirming the issue and transferability of all relevant licences, an investor should also review pending complaints or investigations that might either jeopardise the target’s licences or otherwise subject it to substantial liability. Telecom operators are involved in disputes with the DoT on account of licences, spectrum or fees frequently. The details of such disputes should be examined in detail. Third, an investor should evaluate all significant contracts to which the target company is a party. The target’s customer contracts underpin its revenues, while its infrastructure sharing contracts, tower contracts, undersea cable user contracts, supply and employment contracts are important for assessing its costs and the scope for cost-savings. Finally, various additional due diligence issues arise with respect to particular types of telecoms-related service providers. The most important cost of a competitive fixed company is the amount it must pay for interconnection services and the use the incumbent’s other facilities. In contrast, one of the most important revenue streams for a telecoms operator is wholesale revenue. This cost or revenue is generally governed by the fixed company’s interconnection agreement with the incumbent.

Stacey: Like all businesses, telecoms businesses have employees, contracts, litigation and financing, which will bring up issues which parties frequently face and where there is a well-worn process to addressing, mitigating and resolving the issues. In addition, the telecoms industry is heavily regulated and under constant scrutiny from competition authorities. These are areas where understanding the regulatory issues, both from an historic compliance perspective and from a third-party approval perspective, is vital in order to understand the impact on the risks, timetable and overall process. In addition, many operators are now providing financial services to consumers, which requires an analysis of the regulation of financial services, mobile banking or payment solutions provided by the target, including whether a banking licence is required for the services offered. Telecoms businesses can also enter into complex arrangements relating to their network and IT architecture, such as network sharing, and tower sale and leaseback agreements.

Young: Licences, authorisations and approvals that are required to operate in the telecommunications sector vary across jurisdictions. Some of these may come with specific and material conditions attached which could derail the acquirer’s plans for the target. Some countries have restrictions on foreign ownership which may require recalibrating in-country strategies and force forging local partnerships. The recent industry-wide urge to converge has also increased the level of regulatory oversight and regulators’ appetite to impose conditions that must be met in order for the transaction to be approved. The thick layer of regulations means that investigating targets’ regulatory compliance can be a headache. At the same time, as the telecoms industry is moving to the cloud, assessing what is here and now is not enough. Acquirers need to be on the lookout for what is around the corner as, for example, VoIP services may soon attract further scrutiny. This is important as the applicable regulatory framework affects the profitability of the business and the utility value and performance of its assets.

Elspass: In addition to antitrust analysis, other factors often requiring particular attention include the availability of spectrum, both in terms of the longevity of allocations, licences and restrictions on usage across different technologies, existing regulated or commercial access to networks, the terms of network sharing arrangements, which may limit the ability to realise synergies, co-investment agreements, and the implications of regulatory changes such as the European Electronic Communications Code.

Di Paola: In Argentina, it is important to analyse the telecommunications licence status with ENACOM in terms of compliance with the licensee’s obligations under its licences, the legal basis that supports ownership or the right to use telecommunications networks necessary for the provision of services, government permits for network laying, the interconnection contracts as well as those suppliers necessary for the operations, such as internet access providers and data traffic, and contractual documents related to the target’s portfolio.

The Indian telecommunication industry has been strained by intense competition which has adversely affected pricing power.
— Sandeep Mehta

FW: Are any legal and regulatory issues having a notable impact, either directly or indirectly, on M&A in this space?

Stacey: Certain legal and regulatory developments have, in recent years, had an impact on deals in this sector. The first development is in the area of anti-bribery and corruption. Changes in legislation, as well as investor demands, and a sharper focus from authorities, has shone a spotlight on the telecoms sector, with a number of notable global operators falling foul and being subject to significant fines from authorities. Any well-managed M&A process now includes significant time and resources dedicated to ensuring that thorough due diligence is carried out in relation to both the counterparty and the target to uncover any areas of concern and to properly manage and mitigate any risks. This has resulted in certain transactions not being implemented where risks are uncovered and the buyer is unable to get comfortable with the potential consequences, not only from an anti-corruption and anti-money laundering perspective, but also from a reputational viewpoint.

Elspass: The telecommunication markets are highly regulated. Despite the strong role of national regulators, the key player in the European market remains the European Commission. Considering the ambitious political plans of several Member States to foster the expansion of the national fibre networks, the European Commission is currently in a trilog with the European Parliament and the Council of the European Union about a new telecoms legal framework. Several telecommunication associations expressed concerns regarding the alleged regulatory plans of these European institutions. One key point of discussion is whether and to what extent telecommunication network operators should be subject to any regulation even if they do not have significant market power. It is further discussed whether incumbent operators should be granted a temporary relief from regulations, specifically ex ante price regulation, if they cooperate with smaller players. It remains to be seen how the new legal framework will ultimately be structured. What can already be said today is that Germany in particular has a strong interest in pragmatic solutions that contribute to a faster broadband roll-out, given its need to catch up with other countries.

Di Paola: Parties are permitted to close a transaction in Argentina that implies a direct or indirect change of controlling shareholding in a telco licensee or the transfer of a telco licence prior to obtaining approval from ENACOM, provided that the transaction is subject to ENACOM’s post-closing approval. From a regulatory standpoint, transaction parties and the telco licensee are required to submit to ENACOM a request for approval within 30 days from closing of the transaction. It is worth noting that, in practice, the purchaser of a controlling shareholding in a telco company usually prefers to establish ENACOM’s approval as a condition to closing, although the regulatory framework allows for the execution of the transaction prior to obtaining ENACOM approval. If parties prefer to close the transaction upon ENACOM’s approval, then the filing with ENACOM is made upon signing the corresponding stock purchase agreement and the closing is subject to the referred approval.

Mehta: In India, under the transfer or assignment of any existing licence under the Unified License requires prior written approval of the DoT. In case the transferee company is a listed entity, an approval from the competent authority, the Securities and Exchange Board of India (SEBI), is required to be sought before the licensed company files the scheme of merger or amalgamation with the NCLT. In addition, if a merger proposal results in a market share in any service area exceeding 50 percent, the resultant entity is required to reduce their market share to 50 percent, failing which the DoT may take suitable action against the entity. These restrictions can have far-reaching implications, for example the resultant entity of the Vodafone-Idea merger would have to surrender excess spectrum in as many as five circles. M&A guidelines state that no refund or set-off of money paid or payable for the excess spectrum shall be made by the government. In addition, the guidelines for trading of excess spectrum by access service providers restrict spectrum trading based on the bandwidth and block size of the spectrum and levy a transfer fee of 1 percent of the transaction amount or the prescribed market price, whichever is higher, on all spectrum trade transactions. The total spectrum held by the resultant entity cannot exceed the limits prescribed and the excess spectrum must be surrendered within one year of the permission being granted. M&A guidelines do not provide for sale of excess spectrum.

Young: Regulators around the world will continue to try to rein back on the degree of market consolidation. Competition authorities will monitor M&A deals closely in order to ensure a competitive environment that protects consumer choice. Rising national protectionism is also likely to put national security aspects of foreign takeovers of telecom assets high up many governments’ agendas. Since the beginning of the year, the US Congress has proposed to restrict the government’s use of Chinese telecoms equipment from ZTE and Huawei. In February 2018, US regulators torpedoed a China semiconductor deal. And just last month, it has been reported that Qualcomm had to refile a China antitrust application to clear its $44bn acquisition of NXP Semiconductors. The tit for tat nationalist politics are likely to inform regulatory environments and attitudes, and hinder significant M&A activities is some parts of the world.

Germany in particular has a strong interest in pragmatic solutions that contribute to a faster broadband roll-out, given its need to catch up with other countries.
— Mathias Elspass

FW: What is the outlook for consolidation in the telecommunications sector in 2018? How is this likely to affect competition?

Young: The recent wave of in-market convergence, driven by a shift to ‘quad play’ offerings, where many telecom providers sought to become a one-stop shop for TV, broadband, fixed and mobile telephony, is unlikely to subsist. The chilly reaction from the competition authorities clearly signals a desire to maintain a controlled level of in-country competition between mobile network operators and any outcome will set the tone of the level of regulatory oversight that telecom operators can expect from authorities for years to come. A decreasing number of traditional players means that future consolidation efforts will often involve four-to-three merger scenarios, something that many national regulators treat with suspicion. Dealmaking is likely to slow down as the parties may need to submit proposals containing substantial sets of remedies. Regulatory clearances are also likely to include significant carve-outs that encourage new market entrants. The competitive focus may further shift to seeking opportunities to grow by taking on new roles in other vertical markets. There is, however, a risk that some of this may stunt innovation.

Di Paola: As a consequence of the merger of Cablevisión/Fibertel with the company Telecom Argentina and consequent concentration in a significant part of Argentina’s telecommunications market, the market share is different between, for example, fixed access to internet and mobile services. It is expected that the rest of the market players will increase their investments to compete in terms of quality and price of services, and that certain telecommunications companies, from small to medium-sized, will become attractive to investors with expectations of consolidating their operations and in that way to make the necessary investments to compete with the necessary scale.

Mehta: The acquisition of the wireless assets of Reliance Communications Limited by Reliance Jio will mark the end of the immediate consolidation phase in India’s telecom industry. The number of players after the consolidation phase is optimal for the long-term sustainability of telecom companies. Consolidation in the sector is likely to take shape in 2018 with telecom companies reaping benefits from operational synergies and overall reduction in cost. However, competition is expected to remain intense over the next 12 to 18 months, as leading operators seek to grow their market share. The DoT approved a recommendation to extend the time period for payment of spectrum bought in auctions by telecoms to 16 years from the current 10 years. The telecommunications industry will probably recover from 2019 onwards as a result of a consolidated structure, return of pricing power and increase in data usage.

Elspass: According to initial forecasts, the basic economic conditions for M&A in Europe will remain extremely good in 2018. It seems likely that we will see further consolidation attempts in the European market, but the attitude of regulators to this is still sceptical, so it will not be easy.

Stacey: In-market consolidation will remain a key focus for operators. In Europe, some notable transactions have been completed but a number of markets and operators still have ambitions to consolidate. However, moving from four to three operators, while possible, can be a challenge. The price of remedies demanded by the competition authorities can be high, including mandatory access to an operator’s infrastructure for new entrants into the market, divestment of spectrum and other remedies to support the approval and promotion of continued competition in these markets. Competition authorities have the tricky task of balancing protection of consumers and a healthy, competitive market against enabling operators to invest properly in networks, spectrum and solutions for consumers. In other markets, such as Africa, in-market consolidation will be key over the coming years, where many smaller countries have multiple operators and fragmented spectrum allocation.


Mathias Elspass specialises in public law, in particular public planning and environmental law as well as energy law and public commercial law. He advises companies and public authorities on public permit and planning procedures as well as project development, including zoning plans and development contracts with municipalities. He can be contacted on +49 211 4355 5260 or by email:

Sandeep Mehta specialises in foreign investments, mergers and acquisitions, joint ventures, collaborations, technology transfers, inbound and outbound investments, takeovers, business transfers, restructuring, reconstruction and related transactions. He has advised Indian and foreign clients on corporate, commercial, employment and real estate laws and related legislations. Prior to joining JSA, he was a partner with Little and Co., Advocates and Solicitors for over six years. He can be contacted on +91 22 4341 8511 or by email:

Daniel Francisco Di Paola joined Marval O’Farrell & Mairal in 2000 and is currently a member of the telecommunications, media & technology (TMT) department. Before joining the firm, he worked as a paralegal at Angel F. Di Paola & Asociados for six years. He graduated from the Universidad de Buenos Aires with a law degree in 1999 and later completed a Master’s in Telecommunications at the same university. He / She can be contacted on +54 (11) 4310 0100 ext. 1508 or by email:

Oliver Stacey is a corporate partner at Norton Rose Fulbright based in London. He specialises in advising on a wide variety of different corporate and commercial transactions, including M&A, joint ventures, private equity investment, privatisations and capital raising. A specialist in TMT transactions, he has extensive experience on a wide variety of transactions within the sector, including advising Orange on the £12.5bn disposal of EE to BT and its $4.4bn acquisition of Jazztel Plc. He can be contacted on +44 (0)20 7444 5038 or by email:

Michael J. Young advises clients in respect of a broad range of corporate finance and commercial transactions, including cross-border and domestic takeovers, mergers and acquisitions, joint ventures and equity issues by public and private companies. He has extensive experience in acting for companies on their admission to the markets of the London Stock Exchange and subsequent fundraisings. He also acts for early stage and fast growth companies on all types of equity financing rounds. He can be contacted on +44 (0)20 3116 3655 or by email:

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