Sector convergence and advances in technology and digitalization are altering the telecommunications landscape.
As companies seek to adapt and excel by reimagining business models and making the most of innovation and automation, talent has become a key priority to drive both the corporate strategy and deal intentions, according to the most recent edition of the Capital Confidence Barometer.
Positioning for convergence is driving a number of high-profile deals, such as AT&T’s announced acquisition of Time Warner, yet smaller deals that can fill gaps in portfolios or provide innovative assets or people are also moving into focus as companies look to overhaul their business models. In this light, a number of carriers are pursuing “bolt-on” acquisitions in areas such as the Internet of Things (IoT) and over-the-top (OTT) video services.
Deal intentions bounce back
As deal intentions rebound from six months ago, 48% of telecommunications executives indicate that they are actively pursuing a merger or acquisition in the next 12 months. Deal fundamentals support this surging confidence with executives feeling stable or positive in their confidence about the number of acquisitions and the likelihood of closing. This confidence bears out in the number of deals telecommunications companies have on the go, with 37% indicating that they have five or more deals in the pipeline.
Telecommunications companies look to win the war for talent
As telecommunications companies react to the digital disruption that has upended business models across the industry, acquiring talent has become the most significant strategic driver for pursuing acquisitions outside of their own sector. Talent is also top of mind as a business imperative as companies look to reskill workers and shift skills and talent within the business to gain efficiencies from greater automation.
This is particularly important given that a third of telecommunications respondents indicate that the prior investments they’ve made in automation have not proven to have been as successful as they would have liked. As well, in a move that defies popular perception, increasing automation and technological advances have telecommunications companies creating more new jobs rather than reducing headcount.
As telecommunications companies seek to reinvent themselves to compete in a digital world, they are considering deals that not only bring them to the forefront of technology and innovation, but also acquiring the talent they’ll need to get there.
Global Telecommunications Leader
Transaction Advisory Services
Ernst & Young LLP
+1 212 773 9988
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