By one estimate, there have been 161 merger or acquisition deals announced or completed in Europe, so far in 2013. And Deutsche Telekom CEO Rene Obermann says it is necessary for European telecom companies to get bigger, to compete globally.
A major wave of industry restructuring will happen between 2014 and 2016, CSS Insight predicts, with a merger of Orange (France Telecom) and Deutsche Telekom among the deals predicted to happen in 2015.
A precursor would be the sale of T-Mobile US to Dish Network, CSS Insight predicts.
Telecom mergers tend to happen in waves, so it is not to hard to predict that many mergers and acquisitions will happen over the next couple of years, completing a merger wave that was stalled, temporarily it now seems, by the global Great Recession of 2008.
As with past waves of mergers, industry shocks will provide the impetus for the merger wave. Typically, those shocks are economic, regulatory or technological. The issue, some might argue, is whether sufficient capital liquidity will be available to underpin the mergers, as such liquidity is necessary, even when there are industry shocks.
Since the late 1990s, when there was a major wave of mergers, a second wave built in the few years leading up to 2007, after which the Great Recession seemed to slow down dealmaking.
But the U.S. mobile business has seen a big uptick in 2013, and many believe it is a sign of more coming activity globally.
In most telecom markets, at least in developed markets, a “rule of three” will hold, as that offer enough revenue and profit to support a stable cast of providers. But at the recent International Telecommunications Union “Telecom World,” even executives from Southeast Asian countries agreed that was about the number that is sustainable in many markets in that region.