Recently, Bain & Company, an acclaimed firm in the M&A industry, put out an article discussing the rapid growth of the telecommunications industry as one that’s seen increasing deal value and acquisition activity through the first quarter of 2024. Today, we want to explore some of the reasons behind this, and how buyers can take advantage of this unique opportunity.
Why Telecommunications?
The reasons that telecom companies are seeing higher levels of M&A activity are relatively straightforward. The main driver behind this is the rapidly increasing demand for newer, faster network and communication infrastructure by private companies and government entities. These organizations are looking to take advantage of advances in technology to improve the speed and efficiency of, as well as expand, their network capabilities.
This increase is especially due to the massive expansion of 5G capabilities nationwide, which has necessitated an increase in network infrastructure spending. Additionally, the rapid development of Artificial Intelligence has put considerably more importance on networks that can handle the demands of it.
Additionally, companies are increasingly favoring the acquisition of existing telecom companies to boost their own capabilities either to service a larger client base, or to bring the telecom construction process in-house. Either way, the trend shows a desire to acquire companies with the equipment, knowledge, and team to enable them to expand their operations in some capacity.
Overall, the increased demand for services has led to an increased demand to acquire a proven company, and it’s something that any potential buyer or seller should be aware of.
Future Outlook
The outlook for Telecommunications is extremely positive. Post-pandemic trends in consumer and professional habits indicate an increasing amount of business and commerce will take place online. This has necessitated an increase in spending on improving, expanding, and maintaining telecom infrastructure, which in turn has drastically increased the growth of companies in the sector.
Technology is projected to play an ever-increasing role in people’s lives, and this is expected to create a continued increase in the need for telecom companies, and those that service them. As such, there is every reason to believe that Telecommunications will remain an active sector of M&A for the next few years at the least.
Final Thoughts
Overall, the first quarter of 2024 has shown that Telecommunications is a driver of deals. Technology in general has been a popular M&A vehicle over the past couple of years, and Telecommunications is a fact of tech that’s really starting to see accelerated growth as it catches up with recent tech developments, such as AI, cloud computing, and more.
It’s a great time for either a buyer or seller to strike while the iron is hot and take advantage of the increase in activity to either sell an existing business for a high ROI or enter the industry with expectations of industry growth post-sale.
If you are interested in buying or selling a telecommunications company, get in touch with us at sseck@seckadvisor.com or through the contact page on our website.
Link to the Bain & Company article: Telecom M&A: Here Are the Latest Deal Trends Worldwide | Bain & Company