3 March 2012

Consolidation in the global telecommunications market - third year out of ten

The consolidation of telecommunication companies is continuing. Two takeover bids are expected for the severely weakened Cable&Wireless. Tata Communications is in an early phase of review and Vodafone is also busy with preparations.

In the last quarter AT&T has extensively cleaned up its balance sheet. AI analysts interpret this as a preparation for a major acquisition. It is still unknown who the target could be. However, after the experience of the failed T-Mobile takeover, the home market is not expected to be a factor. Verizon continues to push its expansion in Europe. Here a major acquisition could also be useful. Verizon's processes are aimed at higher profit, and these structures can be transferred to European carriers.

In Europe BT, KPN and first and foremost Deutsche Telekom are appropriate takeover candidates. With a profit of €3.8 billion, France Telecom would make a takeover attempt very costly despite the problems they are having in the domestic mobile telecommunications market (in January 2012 alone prices fell 40%).

The two most prominent European telecommunication companies, Telefonica and Telenor, are looking more to their ongoing success in the emerging markets such as Brazil and India. An acquisition in Central Europe would certainly be a topic for Telenor, but the Group lacks the superior internal structures of an AT&T, Verizon or Vodafone needed to make such a large deal successful.