Telecoms: Bigger but fewer deals in US
Bank telecom advisory fees are on the up, but that won’t last for long.
Quality assets left for acquisition in the highly consolidated US telecoms market are rapidly dwindling. According to data provided by Dealogic, the number of completed deals has been dramatically declining over the past few years. However, the size of deals has been increasing – larger mergers are being completed but fewer are completed each year.
This has worked out quite well for banks and boutiques that provide advisory services for telco M&A: the amount of revenue generated each year by US telco advisory firms has been increasing, even as the number of deals decreases. And quarter on quarter over the past year this was also the case [see chart below].
However, there are few quality assets left in the US for takeover targets, according to Per Lindberg, a telecom equipment analyst at Dresdner Kleinwort Wasserstein in London. “Suffice it to say most of the telecoms M&A in the US has been done,” he says. “The big boys have already all reallocated their assets. There are very few big assets left out there. Over the coming year we will see a few rural operators get snapped up. There is also Qwest, which will probably be picked up sooner or later, but the big M&A is done.”