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Inside Telecommunications - 4Q 2011 trends - Global roundup of mergers and acquisitions activity - EY - Global

Inside Telecommunications: 4Q 2011 trends

Global roundup of mergers and acquisitions activity

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Telecoms M&A deal number by area — Q4 2011

Source: ThomsonOne, accessed January 2012.



In Q4 2011, deal activity slowed for the second quarter in a row.


In Q4 2011, deal activity slowed for the second quarter in a row. There were 104 announced telecommunications mergers and acquisitions worldwide. Of these, there were 39 deals with a disclosed deal value, totalling just under $10b.

The average deal value of deals with a disclosed value was $255m. Average deal value fell 9% compared to the preceding three months as total deal value fell 28% and the total number of deals announced declined by 18% quarter-on-quarter.

The quarter's largest deal was SK Telecom's acquisition of a 21% stake in Hynix semiconductor, the world's number two memory chip maker, for $3b. Although SK Telecom sees the controlling stake as a route to diversification, the cyclical nature of the chip industry has seen ratings agencies place the Korean mobile operator on a negative outlook as a result12. Additional capital expenditure requirements could undermine the carrier's cash flows, shortly after it has recently acquired LTE spectrum for US$924m.

Developed market divestments continue


France Telecom is selling its Swiss mobile operations to private equity firm Apax Partners in a transaction worth $2.1b. The move forms part of France Telecom's plans to divest non-core assets in slow growth European markets, an approach also pursued by Vodafone in recent quarters.

France Telecom is looking to expand its presence in developing markets, a strategy that was borne out by its acquisition of Congo Chine Telecom, a mobile operator in the Democratic Republic of the Congo, in October13.

Tower companies to the fore


Tower companies were active in Q4 2011 as they continue to seek scale benefits, while mobile operators increasingly view towers as non-core assets. In December, US-based Crown Castle bought NextGNetworks, the largest provider of outdoor distributed antenna systems (DAS).

The deal will expand Crown Castle's wireless coverage beyond those areas traditionally served by towers — small-cell architecture such as DAS is seen as a vital element in LTE capacity growth going forward.

Telecoms M&A deal number by area — Q4 2011



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12"UPDATE 2-SK Telecom agrees to buy Hynix control for $3bn," Reuters, 14 November 2011.

13"France Telecom-Orange to acquire 100% of Congo Chine Telecom (CCT), a mobile operator in the Democratic Republic of Congo," France Telecom-Orange website,20 October 2011


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