Sector convergence and advances in technology and digitalization are altering the telecommunications landscape, according to EY’s 15th biannual Telecommunications Global Capital Confidence Barometer (CCB). The report surveyed 107 senior leaders from telecommunications companies around the world.
Almost half (49%) of executives cite sector convergence and increases in competition as the biggest disruptor to their core business, while 43% say the impact of digital technology on their business model is the most prominent issue on the boardroom agenda. As a result, telecommunication companies are looking at organic and inorganic opportunities to boost growth and earnings.
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.
Stelios Demetriou, EY Cyprus Transaction Advisory Services Leader, says:
“Telecommunication organizations are seizing significant opportunities by looking outside their institutions for growth. In this convergence, we see companies executing M&A deals aimed at filling gaps, innovating and bringing talent to their organization. Pursuing deals is a growth strategy which allows companies to reinvent their business models and as a result become more competitive, profitable and increase their repertoire of 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.
Demetriou says: “While it is important for telecommunication companies to stay abreast in technological developments, many are considering deals that encompass acquiring talented people for their organizations that will support them in competing in the digital world.”
For a full copy of Telecommunications Global Capital Confidence Barometer, visit ey.com/ccb/telecommunications.