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

Cyber attack methods continue to evolve – report

BY Richard Summerfield

Cyber criminals are deploying new and innovative lines of attack in addition to modified versions of existing methods, according to Verizon’s 2024 Data Breach Investigations Report.

According to the report, which analysed more than 30,000 real-world security incidents, including a record high of just over 10,000 confirmed data breaches, spanning 94 countries, the three most popular vectors for data breaches were unauthorised uses of web application credentials, email phishing and exploiting vulnerabilities in web applications, when excluding errors and misuse, typically honest mistakes by employees.

Attacks utilising the exploitation of vulnerabilities were up 180 percent, according to the report. This increase comes as no surprise given the mass exploitation of the MOVEit zero-day vulnerability and other similar vulnerabilities. Primarily, these attacks utilised ransomware and other extortion-related threat actors, and the main entry point was web applications. Attacks involving ransomware or extortion have seen considerable growth over the past year, accounting for 32 percent of all breaches.

“The exploitation of zero-day vulnerabilities by ransomware actors remains a persistent threat to safeguarding enterprises,” said Chris Novak, senior director of cybersecurity consulting at Verizon Business.

The human element also had a substantial hand in the number of recorded breaches. Sixty-eight percent of breaches involved a non-malicious human element. Accordingly, the onus remains on organisations to improve security awareness among their employees in order to reduce the impact of breaches. The report explains that the most common causes of breaches involving a non-malicious human element are someone falling victim to a social engineering attack or someone making a mistake.

“In either case, these could have been mitigated by basic security awareness and training. This is an updated metric in the report (we would previously include malicious insiders), and it is roughly the same as the previous period described in the 2023 DBIR,” Verizon added.

Report: 2024 Data Breach Investigations Report

Steady start for M&A in Q1 2024, forecasts new report

BY Fraser Tennant

Global M&A in Q1 2024 will see an uptick in activity with acquisitions in the technology, media and telecommunications (TMT), consumer, healthcare and energy sectors set to rise, according to a new report by Datasite.

In the ‘Datasite Forecaster Special Report: The Year of the Buy-Side’, the virtual data room provider suggests that while tighter financing costs, a volatile market and the long-term impact of the coronavirus (COVID-19) pandemic have curbed M&A deal activity in 2023, there will be opportunities in 2024.

According to the report: (i) buyers are taking advantage of softening market conditions and lowered seller expectations to pursue one-on-one acquisitions with vigour; (ii) with sell-side M&A finally cooling in the real estate and industrials industries, acquirers are scouring the landscape for pickups; and (iii) more advisers are being hired for one-on-one acquisitions as buyers decide to take no chances during this rare window of opportunity.

“Fewer sell-side auction processes in top industries this year have opened the door to more one on one deals,” said Merlin Piscitelli, chief revenue officer for Europe, Middle East and Africa (EMEA) at Datasite. “Buyers are taking full advantage, scouring the real estate, industrials, TMT, and consumer industries for pickups.

“The exception to this is energy & power, which is seeing a resurgence on both sides of the M&A equation,” he continued. “Meanwhile, life science and healthcare M&A continues to slowly recover from its COVID-19 induced feeding frenzy.”

The report also suggests that artificial intelligence (AI)-powered technologies will continue to impact not only the kinds of deals being done but also how deals are managed.

“From its ability to streamline several aspects of dealmaking, including powering data analysis and automating repetitive tasks, the momentum behind AI is set to grow,” added Mr Piscitelli. “In fact, in a recent Datasite survey, 42 percent of global dealmakers said productivity was the biggest benefit of using generative AI in their business and most expect that AI will help speed up deals by 50 percent.”

Another sign, according to Datasite, of a steady start to M&A activity in Q1 2024 is the willingness of acquirers to bring in financial advisers – buy-side deals being one-on-one acquisitions in which advisers have traditionally played a smaller role.

Mr Piscitelli concluded: “For years, strategic buyers have struggled to acquire in a market rife with private equity competition and inflated valuations. Without knowing how long their window of opportunity will last, buyers are leaving nothing on the table.”

Report: Datasite Forecaster Special Report: The Year of the Buy-Side

PE and VC-backed firms see rapid European growth, reveals new report

BY Fraser Tennant

European private equity (PE)- and venture capital (VC)-backed companies are growing rapidly and significantly outperforming privately owned firms, according to a new report by Gain.pro.

In its 2023 ‘Finding Growth in Europe: A Private Equity Perspective’, it is revealed that over the past decade, PE- and VC-backed companies achieved growth rates of 10 to 12 percent – double that of privately owned companies at 5 percent.

Among the key takeaways from the report, PE- and VC-backed companies are more active in buy-and-build than their privately-owned counterparts. An active buy-and-build strategy is applied by 28 percent of PE- and VC-backed companies, meaning they acquire at least one company per year. This compares to only 12 percent for privately owned companies.

In terms of organic growth rates, the report notes that the technology, media and telecommunications (TMT) sector is performing best, showing an average organic growth rate of 8 to 10 percent. TMT is followed by the financial services and science & health sectors. The report also showcases that there are plenty of growth opportunities in the lower-growth industrials, materials & energy and consumer sectors.

“With high-interest rates here to stay, growth is only going to get tougher,” said Sid Jain, head of insights at Gain.pro. “But what we see in the data is that PE-held businesses continue to demonstrate resilience. It is clear that even in today’s lacklustre macro-environment, investors can expect significant opportunities within the European PE landscape.”

According to the report, European investors need to be more vigilant to find growth opportunities, seeking out multiple arbitrage opportunities that do not rely on overall market multiples, but more on buy-and-build and operational improvements.

Mr Jain concluded: “The next decade will be challenging for PE investors, but those who work hard and use smart data-driven sourcing strategies will be well-positioned to succeed.”

Report: Finding Growth in Europe: A Private Equity Perspective: 2023 Edition

Global fraud rocketed in H1 2023, reveals new report

BY Fraser Tennant

Despite efforts to thwart scammers through regulation and government action, fraud levels are continuing to increase across the globe and rocketed in H1 2023, according to a new report by NICE Actimize.

In its ‘Delving Deeper: 2023 Fraud Insights Second Edition’, the financial crime solutions provider reveals that FIs are under mounting pressure due to the surge in fraud attacks, rising transaction volumes, and the ever-evolving landscape of regulatory and consumer liability requirements.

The report’s key findings include: (i) total payment volume is up 22 percent when compared to H1 2022; (ii) the value of these payments and fraud value has increased by 18 percent; (iii) the attempted fraud rate for international payments increased 31 percent in H1 2023; and (iv) for international transactions, 60 percent of the fraud was conducted using money mules rather than traditional peer-to-peer (P2P) methods

According to the report, the rise in fraud and scams can be traced back to the increase of real-time payments, which are quick and easy ways for scammers to find their victims. Also adding to the pressure on FIs is the April 2024 liability shift deadline for compliance with new, mandatory regulatory rules.

“FIs should not wait until April 2024 to act,” said Chad Hetherington, vice president and head of product at NICE Actimize. “With the rise in real-time payments creating new opportunities for scammers, FIs and banks must act now to catch criminals quicker.

“The speed, ease, and varieties of scams gaining traction shows fraudsters are investing in new and perfecting existing scams,” he continued. “These issues all signal the immediate need for FIs to take action to adopt next generation technology to fend off the threats of tomorrow.”

The report also notes that the scale of fraud attacks along with new mandatory regulatory requirements has forced FIs to expand fraud prevention into other areas for improvement. These include changes in regulation, with fraud liability shifts top of mind, especially in the space of scams and authorised push payment (APP) fraud.

Mr Hetherington concluded: “As cooperation grows within the financial services industry, collective intelligence and innovation will be vital so FIs can protect both their organisations and customers.” 

Report: Delving Deeper: 2023 Fraud Insights Second Edition