Telecom deal value leaps in Q1 2024 – report

BY Richard Summerfield

Amid a period of upheaval in the telecommunications sector, companies are turning to M&A to drive their business forward, according to analysis by Bain & Company. Integrated telcos are becoming disaggregated and narrowly focused business models are emerging, altering the telecommunications landscape.

With this shift, M&A deal value in the telecommunications space spiked in the first quarter of 2024, as some telcos increased scale and others expanded in adjacent sectors such as finance and insurance, according to Bain.

Indeed, deal value increased significantly from around $2bn in Q1 2023 to almost $21bn in Q1 2024. Though the figure is down from $35bn in Q4 2023, a single deal - Telecom Italia’s $23.3bn agreement to sell its fixed network business to KKR - accounted for two-thirds of that quarter’s value. By comparison, the largest announced transaction in Q1 2024 was a scale deal which saw Swisscom agree to acquire Vodafone Italia for $8.7bn and merge it with Swisscom’s Italian subsidiary Fastweb.

Europe has been the focal point of many industry transactions in recent years, driven by in-country scale deals and infrastructure divestments. Scale deals accounted for slightly more than half of global deal value in the first quarter of the year, a notable shift from each of the past two years, when this category made up less than a quarter of deal value. Infrastructure divestments dominated telecom M&A from 2019 to 2022, but high interest rates and other macroeconomic challenges have reversed that trend of late.

According to Bain, factors such as fibre network consolidation will likely spur deals going forward. Brazil and the US are some of the largest markets where such consolidation is expected to occur. Likewise, enterprise services and other higher-growth segments are set to attract deals, with private equity firms expected to be among the most active dealmakers.

News: Telecom M&A: Here Are the Latest Deal Trends Worldwide

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