& the GII
Aust & NZ
This page highlights major mergers and acquisitions in the
connectivity sector (including fixed phone line, mobile phone
and cable service operators).
It covers -
The note supports the discussion of the 1990s telco sector
bubble and the more detailed
guide on Networks & the
Global Information Infrastructure. It is complemented by a
separate note on telco privatisation.
In discussing the telecommunications sector bubble - which
featured both rational (although sometimes unfortunate) spending
by network operators and infrastructure suppliers and "irrational
excess" - we have noted eight drivers -
search for economies of scale in the operation of fixed
line and wireless networks
complementary drive for critical mass, for example to have
sufficient resources to acquire 3G wireless network licences
from governments (with the winners of most licence auctions
subsequently being perceived as the governments rather than
bidders who overpaid and in some instances thereafter relinquished
of a sustained and significant increase in corporate and
residential voice and data traffic, encapsulated by the
claim that "internet traffic doubles every 100 days"
of a window of opportunity, with for example hype by some
pundits and financiers regarding a 'once in a lifetime'
chance to enter or dominate markets through establishment
of new networks
access to capital for takeovers and infrastructure deployment
opportunism and defensiveness, with for example acquisition
of competitors to preempt their takeover by/of a network
of operators, introduction of competition and loosening
of restrictions on foreign direct investment
deregulatory zeitgeist, with government agencies sitting
on their hands or tacitly encouraging champions to build
scale at the national, regional or global levels
is unclear whether much of the merger and acquisition activity
created substantial and lasting value. Deflation of the telco
secto bubble saw major declines in the market value of some
organisations, the demise of some peers, surrender of licences,
departure from particular regions and acquisition of some
infrastructure at huge discounts.
It is also important to consider relativities. The AT&T
takeover of BellSouth in 2006 created the largest operator
in the US by customers in each of that nation's landline,
broadband and mobile phone markets. However, globally it would
rank behind several others. In terms of revenue with US$69.4
billion in 2005 it would be smaller than Japanese group NTT
(US$99.9 billion revenue). Among landline operators it would
follow China Telecom and China Netcom. It would be the ninth
largest mobile operator behind multinationals such as Vodafone
and would have only a third of China Telecom's broadband subscriber
Telco merger and acquisition activity in the US since 1984
has come to be a case of AT&T's successors putting humpty
dumpty back again as the regional operators and new entrants
such as Qwest buy each other.
Globally, network development and telco M&A by US corporations
is striking. Acquisition of non-US assets reflects the globalisation
of markets and corporations, deregulation, search for economies
of scale and scope and corporate tax laws highlighted in the
discussion of M&A elsewhere
on this site.
The following pages supply a chronology of major takeovers
and mergers in the connectivity sector, particularly fixed
and mobile phone line network operators.