Telecoms Infrastructure M&A: What does the future hold?

With digital transformation increasing the volume of data large TMT companies need to process, and the shift to off-premises cloud computing, competition for the best assets is intensifying. Buyers need to be selective and understand how to acquire at speed, as well as navigate increased regulatory scrutiny, global political uncertainty, the impact of 5G, unsettled markets and questions about trade and tariffs. 2019 has seen a shift in trends from previous years, so how can TMT Dealmakers stay ahead of the curve?

Recognise subsector confidence

Fibre, towers and datacentres still remain the most active subsectors within telecoms infrastructure with the emergence of disruptive cloud, mobile and big data analytics technologies driving dealmaking. All industries are looking to outsource their cloud services and datacentres to propel them in their markets, while telecom operators are widely adopting network separation strategies and infrastructure light business models, which is also driving transactions. We expect this trend to continue and there to be a good mix of mid-sized secondary transactions of digital infrastructure and datacentre operators, as well as some large corporate divestitures.

Changing business models

The massive potential offered by edge computing has seen a variety of operators adapting their business models to tackle the market demand through the different layers of the industry, particularly within datacentres. There is a clear trend towards enterprises not wanting to own or operate their own data centres, and outsourcing is fuelling both data centre operators to scale up through acquisition or specialise in particular layers. With traditional players like Equinix offering an end to end service, datacentres wholesaling capacity to mid-tier clients, as well as hyperscalers deploying their own datacentres and utilising the infrastructure of others, the trend looks to continue. Hybrid solutions – a mix of private and cloud capability – will also be on the table as demand and personalisation increases.

A global outlook

The US and Europe will continue to lead M&A transactions, with US buyers still attempting to penetrate the European market. With prices still high, it isn’t clear who will triumph. The European telecom incumbents have been relatively cautious – both in terms of M&A, as well as overall investment, so private capital has stepped in to lower the cost of transactions. Compared to the US, Europe is more fragmented and has seen less consolidation, but this is expected to change with cross-border M&A a key trend. China is also expected to be in pole position through innovating in new technologies like 5G, while the rest of the world catches up. Africa also has major potential for investors in TMT, with the rise of strong digital economies and emerging tech champions, supported by rapid growth in infrastructure rollout in key markets

Regulatory challenges

As well as continued regulatory scrutiny of mergers and acquisitions on competition grounds, governmental scrutiny, especially regarding Chinese investment in the UK, EU and US, will affect telecom infrastructure transactions, particularly the outcome of the 5G race. The increasing importance of data privacy and the introduction of GDPR and CPTPP trade agreements, particularly with the US withdrawal and the upcoming Brexit negotiations are also expected to have an impact.

Cyber security increasingly important

As companies rely more and more on cloud-operated infrastructure, cyber security is playing an ever-increasing role in securing a deal, due to the need for multiple suppliers providing security at both datacentre, software and service levels. We should see a healthy level of smaller consultancies or cyber security specialists being acquired as a result of the need for this skillset.

Areas for consideration

The growth of 5G is reliant on infrastructure availability. With MNOs currently dominating the network revenue, and the fallout for the demand for financing new infrastructure, the only alternative is to seek other sources of investment. With 5G implementation looking to happen more slowly than the industry expects, the business case for solid revenues is yet to be determined.

Such M&A activity will be a major discussion point at upcoming TMT Finance World 2019 (November 27, London); as part of the three-day leadership summit, TMT World Congress 2019. The event offers a maximum of 500 TMT industry investment, M&A and finance professionals the opportunity to discuss and plan the biggest telecoms infrastructure deals. 

For more information about TMT World Congress 2019, including tickets, please visit or contact for speaker and sponsor opportunities.