As digital technology has changed the way in which the UK population communicates, the telecommunications industry has had to adapt and diversify its services to remain relevant.
Mergers and acquisitions are one way that businesses within the telecommunications are ensuring the longevity of their business and remaining competitive, whether it is by filling knowledge gaps, extending geographical/customer reach, or fostering technological innovation, telecommunication companies are seeking to diversify as traditional services shrink and guarantee their place in the fast paced sector. This trend is not a new one within the telecommunications industry. The demerge of BT’s wireless service BT Cellent (rebranded to O2) and subsequent sale to Spanish telecoms giant Telefonica back in 2005 was one of the most prolific acquisitions of the last decade. Now the development of digital has begun a new surge of M&A within the industry.
There is one fact that remains true, the telecommunications sector in Europe is consolidating, which is more than evident in the UK with less service providers now operating.
In this blog we look at some of the big players in the UK’s telecommunications sector as they look to integrate and expand their core telecommunications offering through M&A.
UK customers: 9.8 million for home broadband and phone
Products: TV, broadband, land line
BT has been trying to get back into the mobile market after offering a £12bn takeover of EE, but with calls for them to offload some of their services over market competition claims, could this present an opportunity for other companies to diversify or optimise their current offering?
UK customers: 25 million
Products: TV, broadband, mobile
Despite the recent takeover bid by BT, EE themselves are no strangers to mergers and acquisitions. In fact, EE seek greater convergence as the UK’s biggest service provider expands its service offerings to broadband and TV.
Merger: Between T Mobile and Orange Networks
Acquisition: BT (Approval Expected early 2016)
UK customers: 22 million
Telefonica’s imprint in the UK, O2, is set to be sold yet again after failed attempts by BT to buy it back.
Acquisition: Hutchison Whampoa
UK customers: 20 million
Products: Mobile, soon to launch broadband and TV
Vodafone is diversifying its offering as it is set to expand into television and broadcasting markets.
Acquisition: Spanish cable company Ono.
Source: The Guardian 2014
The evidence suggests that Telecommunications as a sector is changing.
The fragmented industry seeks convergence and niche companies that solely focus on providing limited or dated services could end up making themselves obsolete.
What Does This Mean For Everyone Else?
This is not just the case for telecommunication giants like the ‘big eight’, but for all of the companies that work within telecommunications, such as IT providers. They must remain future-focused and realise the opportunity that the industry provides.
Traditional telecommunications is shrinking. Industry regulator Ofcom published a report in August that has shown a 7% drop in total revenues by telecommunication carriers since 2008. Any business that provides support and/or services within the telecommunications must remain alert to where the industry is going, what are its’ changing needs are and the possible opportunities available to buy (or sell) companies based on the current landscape.
The current environment within the industry is fast paced and so the need to expand a company’s service offering and customer base is key. North West England technology company JMC IT, for instance merged with IT Lab, which has resulted in both companies innovating further to improve its service propositions and remain competitive.
The further dependence on digital has led to more traditional companies acquiring smaller, more creative companies – digital is not only developing the industry, but also changing the perception from one of a utility offering to a creative field. Companies not adapting to this change run the risk of losing customers and shrinking profits.
Now more than ever telecoms providers and service businesses must look at the opportunities available to them.
Benchmark International are experts in helping companies with telecommunications look for potential buyers/mergers with a long-term focus in ensuring that your business is ready for the trends that are at the forefront of the sector. We care about getting results and developing merger and acquisition strategies that are just as unique as you are.