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Telecomms deals spin up billions of dollars

A 1000 per cent leap in average deal value in the US alone

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Merger mania hit the telecomms sector in the first half of 1999, according to Broadview's Technology M&A Report. Global acquisition and consolidation deals jumped 40 per cent from 295 in the first half of 1998 to 414 in 1999. North America saw 261 deals in this sector, up from 208 for the same period in 1998. Over a two-year period from 1997 to 1999, the value of telecomms deals in the US ballooned over 1000 per cent from $10.7 billion to $128.5 billion in 1999. Globally, the value jumped over 66 per cent to $271.5 billion. Paul Deninger, Broadview chairman and CEO, said efforts to build customer bases, expand geographically and improve services continued to fuel acquisition. "This trend can be expected to continue into the second half of this year," he said. "Buy or Die" is the rule in the networking field, according to Broadview. This sector saw the steepest growth in deal value, rising 71 per cent to $10.6 billion, with the number of deals up 420 per cent from just five to 24. Hardware deals were spurred on by next-generation communications networks development, yet their numbers stayed flat. The value of global hardware deals rose 125 per cent to $100 billion, with the number up only three per cent at 331. Broadview's results pinpointed Cisco, Lucent and Nortel Networks as candidates actively snatching up-and-coming technology companies. It also said these companies were investing in more developed companies to study their R&D, and then buying them out completely within two years. It used Cisco's $407 million acquisition bid for Transmedia Communications as an example. It said the competition between Cisco, Lucent and Nortel to become the top supplier of infrastructure to telecomms and cable companies had driven acquisition growth in the area. ®

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