There are already clear signs that mergers and acquisitions of the telecommunications industry may rise steadily in 2011 and 2012. Some operators have announced plans to conduct large-scale transactions.
In 2008, before the growth of the global economy slowed down, the telecommunications industry has been in the pursuit of large-scale mergers and acquisitions. But in the subsequent two years, operators set aside most of the transaction to focus on addressing the economic crisis. However, after the two years of the quiet period, many telecom operators become saturated in the development of its domestic market users. In the fierce competition they begin to continue their former growth plans.
They have recognized the limited opportunities to enter new markets. New potential opportunities and the single market opportunities are few. By the merger they will be able to achieve their goals. Therefore, the trading activity of the telecommunications industry may again become active. The next wave of M & A wave is likely to be the industry’s consolidation.
Compared with other industries, the telecommunications industry remains very fragmented. The income of the largest operator accounts for only a small part of the total industry revenue, indicating that this area is in the golden age of further consolidation.
In the new round of growth period, the re-shuffle merger of the telecommunications industry includes three types: first, the large-scale cross-border trading is expected to become the mainstream. Operators who can take the opportunity to take advantage of this integration is expected to become the winner of the global telecommunications industry. They will also have sufficient financial resources and strong organization, including management, business structure, processes, etc.
Second, the merger may be at the market level, including the business combination of the same market. Operators will look for opportunities to acquire the existing business of a competitor, merge competitive organizations. Although this form is not as popular as cross-market integration, it allows operators to increase the number of users, fight for greater market share and eliminate direct competitors at the same time. Finally, the third kind of merger will appear within the operators.
In the short term, carriers will be possible to achieve recovery and accelerate growth through the three types of merger. However, the operator inter-group cross-market mergers and acquisitions may reshape the telecommunications industry. The analysis also showed that cross-market integration is in a upward momentum, while the opportunities of market integration at the same level will gradually decrease.