Communications Service Provider M&A in the North and South Americas – Key Trends and Insights

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 America’s 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.

Several CSP horizontal transactions have been announced or been completed in North America in the 12 months reviewed. Of those examined, three took place in the US and one in Canada. The biggest of these is the merger of AT&T’s WarnerMedia business unit with Discovery to create Warner Bros Discovery, a streaming company, and the acquisition by Rogers Communications of Shaw Communications in Canada. The period also saw Verizon complete its acquisition of MVNO Tracfone Wireless and Atlantic Broadband acquire the Cleveland and Columbus, Ohio, operations of Wide-Open West (Wow!) a cable provider. In Latin America, given a dominant designation by the Mexican regulator, Claro continues engaging in strategic M&A across the region. Claro is acquiring a stake in Brazilian telco Oi and has announced a merger with pay-TV provider VTR in Chile. Meanwhile, Tigo continues consolidating its position throughout Central America and acquired the remaining 45% of Tigo Guatemala that it did not own. Lastly, MNO WOM has expanded operations outside of Chile with the announcement of a merger with MNO Avantel in Colombia.

Select CSP horizontal M&A activity in the Americas, Oct 2020 to Oct 2021

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The South American region also saw tower asset activity, with Telefonica selling its tower division comprised of 7000 towers in Brazil, Chile, Peru, and Argentina. In the US, debt reduction has acted as a driver for CSP horizontal M&A. For example, in 2021 telco AT&T decided to unwind its WarnerMedia business unit through a merger with Discovery. Through this transaction, AT&T aims to focus more on its core mobile and fixed broadband businesses. It will receive $43.0 billion which can be used to unload debt and fund 5G expansion. In Canada, Shaw Communications views being acquired by Rogers Communications as pivotal to expedite the 5G rollout across the country. Having a smaller competitive position, Shaw found it challenging to fund the deployment of 5G technology Thus, as part of the acquisition, Rogers has pledged to invest $5.0 billion in Western Canada to bolster 5G infrastructure. Rogers estimates that this network investment will create around 3000 jobs in Alberta, British Columbia, Manitoba, and Saskatchewan.

Latin American leading players Claro and Movistar are seeking to maximize profits by shifting assets from Central America to faster-growing markets in South America. Claro sold its operation in Panama to Cable Wireless and is now pursuing acquiring a stake in Oi’s mobile business unit to strengthen its positioning in Brazil, Latin America’s largest market. Similarly, as part of its “sustainable long-term focus strategy”, which involves active portfolio management for debt reduction, Telefonica sold its subsidiary Movistar Costa Rica to Cabletica in August 2021. This latest disposal follows Telefonica’s disposal of other units in Central America Nicaragua, Panama, and Guatemala. Furthermore, General International Telecom has announced an agreement with Telefonica to acquire Movistar El Salvador.

What are the sector classifications of communication service providers in the Americas?

The communication service provider in the Americas 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.

Communication service providers in the Americas, by segment

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Market report scope

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

• The first section of the report analyzes global and regional M&A activity in the telecoms, media, and technology (TMT) sector, by transaction value and theme/service area – e.g., connectivity, cybersecurity, cloud, and IoT; and discusses COVID-19’s impact on the TMT M&A market.
• Then, we examine CSP horizontal and non-horizontal activity that has taken place in the Americas over the past year. 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 the growth and synergy ambitions for the involved parties.
• The report concludes with three case studies of CSP M&A deals, their rationale, future strategies, and expected benefits.

Reasons to Buy

• This Insider Report provides a detailed examination of CSP M&A activity and trends in the Americas in a concise analytical format.
• The report describes a number of CSP M&A deals over the past 12 months and analyzes the driving rationale behind these M&A.
• The report is designed for an executive-level audience, with charts and tables boasting presentation quality.