International Finance

Telecom: New growth machine in post-COVID economy

There are several instances of sizable European telecom firms that have successfully expanded through M&A deals

Businesses all throughout the world scrambled to address basic demands, which led to a variety of opportunities being created by COVID.

The necessity for adaptive technologies was increased by remote employment, online education, and social segregation policies, and the telecom industry boomed because of it.

PwC reports that mergers and acquisition activities in this sector have increased 28% year over year, with deal value reaching a record USD 469 billion.

In 2022, there were more disclosed private equity deals totalling USD 194 billion, with almost three-quarters of that value concentrated in the software and internet sectors.

The trends influencing investments and mergers and acquisitions (M&As) in the telecom industry will be covered in this article.

Developing Nations Prioritize Fibre
In Latin America, there is still a high demand for connectivity and broadband services, and several of the biggest telecom companies are concentrating on growing their fiber networks before 5G arrives.

By 2022 end, S&P Global projects that over 50% of Latin American households will have access to broadband, with fibre driving expansion. Fibre will be the largest fixed broadband platform in the area, reaching one in five homes.

The Broadband Equity, Access and Deployment (BEAD) initiative will receive USD 42 billion of the historic USD 65 billion in funding for broadband infrastructure deployment in the United States from the recently passed federal Infrastructure Deal.

The BEAD initiative stipulates that grant opportunities must be available to cooperatives, non-profits, public-private partnerships, private enterprises, utilities, and local governments. It will give states unprecedented funds to support installations in disadvantaged areas.

Private investors are also involved in this.

The European market is more fragmented than the more developed US market, and US investors are eager to enter it.

Domestic Consolidation
In-market consolidation is still a top aim to establish a more sustainable telecom landscape, despite the fact that tight rules present a challenge in some areas.

Operators with heavy debt loads can gain scale and lower fixed costs through in-country consolidation.

There are several instances of sizable European telecom firms that have successfully expanded through M&A deals, and more businesses are focusing on possible targets.

It is hoped that the demand for high-speed networks will make regulators more aware of the investment worth.

Expanding Use Of Disaggregation
Organizations from all sectors are searching for ways to enhance their environmental, social, and governance (ESG) performance.

Disaggregated networks provide a more sustainable, scalable replacement for their conventional forerunners.

Operators can simply change software providers in a disaggregated network, without having to rip out and replace current hardware.

Since 2020, strategic M&A investments have rebounded dramatically in this sector.

This expansion will be aided further by unprecedented demand for telecommunications and data supply.

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