Communications Service Provider M&A in Europe – Key Trends and Insights

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Global M&A TMT deals reached $555 billion in value in H1 2021 representing a more than 160% increase year on year. This value was generated by 482 M&A deals announced in the global TMT sector, with a transaction value greater than or equal to $50 million. The software and services sector topped the TMT deal activity in H1 2021, followed by internet and media, telecom services, and hardware. The impact of the global pandemic was to suppress TMT deal global value in H1 2020 by over 50% compared to a year earlier.

Connectivity, digital media, cloud, big data AI, IoT, telecom convergence, e-commerce, and cybersecurity were among the key themes driving TMT M&A deals in H1 2021. The software and services sector’s deals were driven by themes including AI, IoT software services, big data, fintech, cloud, and health tech. The Internet and media sector’s thematic deals drivers spanned digital media, Internet advertising, and marketplaces. The key themes motivating the hardware sector’s deals include IoT hardware, connectivity hardware, industrial internet hardware, electric vehicles, and data centers. Telecom services witnessed key deals in the themes of connectivity, telecom convergence, 5G, and emerging economies.

What are the market dynamics of M&A in the European communication service provider market?

The impact of the global pandemic was to suppress TMT deal global value in H1 2020 by over 50% compared to a year earlier. There was a sharp turnaround in H1 2020 as the global TMT M&A market recovered, with a deal value tripling year on year. Despite a slowdown compared to the previous semester, global M&A TMT deals reached $555 billion in value in H1 2021 largely driven by the software & services sector.

Telcos in Europe have been acquiring cablecos, ISPs, and MVNOs and attracting institutional investment into their fiber and tower infrastructure. One of the rationales for CSP horizontal M&A activity in Europe has been the convergence imperative. The O2-Virgin Media UK (Liberty Global) merger gave birth to a fully converged and integrated telco. The new entity is able to better compete in the convergence and B2B segments while continuing its aggressive strides in fixed broadband and 5G. Another example is the acquisition of Romtelecom by Orange in Romania. Other drivers for horizontal M&A for telcos have been around growing fixed broadband footprint, expanding geographical reach, and strengthening market share. Selected examples include MTS acquisition of Green Dot and its 13 regional ISPs as well as fiber infrastructure and digital services provider Datagroup acquisition of cableco Volia. Moreover, several CSPs have opened the capital of their towercos/fibercos to investors in order to attract funds for reinvestment in 5G and fiber footprint expansion

Select CSP horizontal M&A activity in Europe, 2021

Select CSP horizontal M&A activity in Europe, 2021

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Europe has witnessed robust M&A activity over the last two years. We have seen M&As between MNOs and cablecos. This was the case of MNO Masmovil Spain acquiring cableco & MVNO Euskatel. Similarly, Iliad Poland acquired cableco UPC after the previous acquisition of MNO Play. Another example is the O2 (MNO) – Virgin Media UK (cableco & MVNO) merger that was completed in 2021. A number of deals have also involved MNOs and converged telcos acquiring ISPs with fiber and xDSL assets Examples include MNO Orange Romania’s acquisition of Romtelecom (MVNO and fixed services provider with converged subscribers), and converged telco MTS Russia’s acquisition of Green Dot which owns 13 regional ISPs in Russia. ISPs have also been consolidating – e.g., ISPs Datagroup and Volia Ukraine.

Other observed M&As not detailed in the exhibit include telcos acquiring MVNOs (e.g., Bouygues Telecom acquisition of B2B MVNO EIT in France), and private equities institutional investors buying/investing in telcos and their infrastructure. For instance, funds managed by private equities/investors Apax Partners and Warburg Pincus acquired T-Mobile Netherlands in 2021. Moreover, telcos fibercos and towercos have attracted institutional investors (e.g., Orange’s towerco Totem, Orange’s fiberco Concessions, Telia’s towerco and TIM’s fiberco FiberCop).

What are the sector classifications of European communication service providers?

The European communication service provider is segmented into four major sectors which include hardware, software & services, internet & media, and telecom services. Software and services include application software, security, gaming, IT services, and the cloud. Internet and media include e-commerce, social media, advertising, music, film TV, and publishing. The hardware sector includes semiconductors, electrical components, consumer electronics, IT infrastructure, telecom infrastructure, and industrial automation. Telecom services include services provided by telcos and other CSPs.

European communication service providers, by segment

European communication service providers, by segment

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Market report scope

Market size (H1 2021) $555 billion
Base year for estimation 2021
Key sectors Hardware, Software & Services, Internet & Media, and Telecom Services
Companies mentioned O2, A1, Avantage, BT, CalcuQuote, camLine, Cancom, Datagroup, Deutsche Telekom, Eir, Elisa, Euskaltel, Evros, GDTs Energy Group, Green Dot, Iliad, Invenium, KNL Network, Liberty Global, Masmovil, MTS Russia, Orange, Play, Polystar OSIX, Romtelecom, Sky, Telefonica, Telefonica Tech, Telenor, T-Mobile, UPC Poland, Virgin Media, Vodafone, and Volia.

The report provides an in-depth analysis of the following:

  • Executive Summary / Key Findings: The Insider Report begins with a summary of the major trends and key findings shaping the European CSP M&A market.
  • CSP Global M&A Activity: analyzes the global M&A activity in the TMT sector, by transaction volume and theme/service area – e.g., software and services, Internet and media, hardware, and telecoms services, and discusses COVID-19’s impact on the TMT M&A market.
  • CSP M&A Activity in Europe – CSP Horizontal M&A: this section provides a number of CSP horizontal M&A examples that have taken place in the European region over the past two years. Analysis is provided on the type of deals, transaction values, the sectors and service areas of the companies involved, as well as the rationale driving the M&A.
  • CSP M&A Activity in Europe – CSP Non-Horizontal M&A: this section provides a series of CSP non-horizontal M&A examples that have taken place in the European region over the past two years. Details on the type of deals, transaction values, the sectors and service areas of the companies involved are provided. Moreover, we analyze the rationale driving the M&A deals and how these support growth and synergy ambitions for the involved parties.
  • Case studies: three case studies of CSP non-horizontal M&A deals are provided, with an analysis of their driving rationale, future strategies, and expected benefits.

Reasons to Buy

  • This Insider Report provides a comprehensive and detailed examination of CSP M&A activity and trends in Europe in a concise analytical format to help executives build proactive and profitable growth strategies.
  • The report describes a number of CSP M&A deals over the past 12-24 months, analyzes the driving rationale behind the M&A, CSPs-related growth strategies, and intended benefits.
  • The report is designed for an executive-level audience, with charts and tables boasting presentation quality.
  • The broad perspective of the report coupled with comprehensive actionable insights will help operators, communication service providers, and other telecom & technology industry players better position to seize growth opportunities in Europe’s evolving M&A market.

O2
A1
Avantage
BT
CalcuQuote
camLine
Cancom
Datagroup
Deutsche Telekom
Eir
Elisa
Euskaltel
Evros
GDTs Energy Group
Green Dot
Iliad
Invenium
KNL Network
Liberty Global
Masmovil
MTS Russia
Orange
Play
Polystar OSIX
Romtelecom
Sky
Telefonica
Telefonica Tech
Telenor
T-Mobile
UPC Poland
Virgin Media
Vodafone
Volia

Table of Contents

Table of Contents

Executive Summary / Key Findings

Global TMT M&A Activity

CSP Activity in Europe

CSP Horizontal M&A: Overview

CSP Horizontal M&A: Rationale

CSP Non-Horizontal M&A: Overview

CSP Non-Horizontal M&A: Acquired Business Details

CSP Non-Horizontal M&A: Rationale

Case Studies

CSP Non-Horizontal M&A: Case Study Telefonica Tech

CSP Non-Horizontal M&A: Case Study MTS Russia

CSP Non-Horizontal M&A: Case Study Elisa

Appendix

Acronyms and Definitions

Companies Mentioned

Related Research

About GlobalData

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