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Telecom Finance in 4Q10: Mergers and Acquisitions, IPO, VC, and Private Placement Deals
Ovum, Feb 2011, Pages: 46
Introduction
Given the ongoing deal activity in the telecommunications sector, all players need to understand deal dynamics, trends, and fundamentals.
Features and benefits
- Understand how industry structure and access to capital is evolving in telecom, and how that differs regionally and across SP and vendor segments.
- Follow telecom's innovation cycle from the ground up, starting with VC-funded start-ups to larger players ready for IPO or exit via merger/acquisition
- Gauge the progress of the economic recovery as it affects the telecom sector.
Highlights
Merger and acquisition and IPO deals:
Public equity markets were weak from April through August; this plus mixed economic news made it tougher to get deals done in 3Q10. Climate started to improve in 4Q10.
Service providers accounted for 89% of annualized merger and acquisition deal value but just 37% of IPO value.
Venture capital:
Downward trend saw relief in 1H10 due to a few big deals, but weakened in 2H10.
Overall tech industry VC funding, though, increased 19% to $12.1bn in 2010. This is due to strong performance in the tech industry’s Services segment, where VC funding grew 31% to $5.36bn.
Private placements (sales) of debt:
As public equity markets fizzled, telecom turned to private debt markets to fund merger and acquisition, capex, and some operations. Private placements are now a key source of funds, for SPs especially, which raised $56bn in the past four quarters.
Your key questions answered
- What is the direction of merger and acquisition activity: up, down, mixed? What are the deal motivators?
- Are VCs still reluctant to invest in telecom start-ups?
- Did late-year stock market improvements affect financial deal activity in telecom?
- Now that economies and stock markets have improved somewhat, are telecom players still relying heavily on private placement markets for capital?
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