Forty-eight percent of telecommunications executives indicate that they are actively pursuing a merger or acquisition in the next 12 months, up from 43% six months ago. This confidence is reflected in the number of deals telecommunications companies have in the works, with 37% indicating that they have five or more deals in the pipeline. Almost half (49%) of these deals are valued at US$250m or less.
Gaeron McClure, EY Global Telecommunications Leader, Transaction Advisory Services, says:
"Positioning for convergence is driving a number of high-profile deals in the sector, yet smaller deals that can fill gaps in portfolios or provide innovative assets or people are also moving into focus as companies look to overhaul their business models. In this light, a number of carriers are pursuing 'bolt-on' acquisitions in areas such as Internet of Things (IoT) and over-the-top video services."
As telecommunications companies react to the digital disruption that has upended business models across the industry, acquiring talent has become a strategic priority, with 53% of telecommunications executives saying that they need to hire more talent in the months ahead. It's also the most significant strategic driver for pursuing acquisitions outside of the sector, according to 71% of CCB respondents.
McClure says: "As telecommunications companies seek to reinvent themselves to compete in a digital world, they are considering deals that not only bring them to the forefront of technology and innovation, but also acquiring the talent they'll need to get there."
For a full copy of Telecommunications Global Capital Confidence Barometer, visit ey.com/ccb/telecommunications.
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About EY's Global Telecommunications Sector
Telecommunications operators are facing a rapidly transforming business model. Competition from technology companies is creating challenges around customer ownership. Service innovation, pricing pressures and network capacity are intensifying scrutiny of the return on investments. In addition, regulatory pressures and shareholder expectations require agility and cost efficiency. If you are facing these challenges, we can provide a sector-based perspective on addressing your assurance, advisory, transaction and tax needs. Our Global Telecommunications Sector is a virtual hub that brings together people, cultures and leading ideas from across the world. Whatever your need, we can help you improve the performance of your business. Visit us at ey.com/telecommunications and follow us on Twitter @EY_Telecoms.
About EY's Global Capital Confidence Barometer
The Global Capital Confidence Barometer gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agendas — EY's framework for strategically managing capital. It is a regular survey of senior executives from large companies around the world, conducted by the Economist Intelligence Unit (EIU). Our panel comprises selected global EY clients and contacts and regular EIU contributors. In this survey, we had 107 respondents from telecommunications companies.
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