There’s plenty of merger and acquisition (M&A) activity in the telecom market. But the number of deals — and the size of each deal — fell significantly in Q1 2016 vs. the corresponding quarter last year, according to MergerMarket.com.
For Q1 2016, there were 39 telecom transactions valued at a combined $13.7 billion — an 81 percent drop in value from Q1 2015 (42 deals, $72 billion). In the past three years, telecom firms announced an increased number of large consolidations fueled by low interest rates, attractive valuations, and cost savings, MergerMarket said.
In Q1 2016, however, telecoms experienced a noticeable drop in value for the sector, mainly due to the absence of megadeals. The only bid deal involved Liberty Global Europe and Vodafone International in a $7 billion hookup.
So what’s ahead? Watch for potential deals in Europe, the researcher says, with the possible divestment of infrastructure assets. However, the recent collapse of deal negotiations between France-based Orange and Bouygues could mean the overall telecom M&A market could see softness for the rest of this year, MergerMarket said.
Separately, telecom giants like CenturyLink and Verizon have been exploring the potential sale of their respective data center assets. Both companies want to remain in the managed and cloud services market, but CenturyLink in particular has been trying to sell its physical data center assets. So far, no deal for the assets has emerged.