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Global Telecoms Business deals of the year 2011
01 January 2012
Turmoil spread across financial markets during the last year but the telecoms sector was still able to see deals in the double digit billions complete in both the operator and the vendor sector
Read more:
Vivendi
VimpelCom
Vodafone
CenturyLink
Level 3
KDDI
PLDT
To download these two tables in an Excel spreadsheet click here (.xls, 30k)
| Deals are ranked by value in $bn and completed between January 1 and December 12 2011 |
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| Acquirer |
Target |
Vendor (where applicable) |
Value US$bn |
Acquirer Nationality |
Target Nationality |
Acquirer Advisors |
Target/Vendor advisor |
Date completed |
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| Vivendi |
SFR (44%) |
Vodafone |
11.3 |
France |
France |
Rothschild |
Lazard, BNP Paribas |
June |
| Vimpelcom |
Wind |
Weather Investments |
6.5 |
Netherlands |
Italy |
UBS Investment Bank, Deutsche Bank |
Lazard, EFG Hermes, Credit Suisse and for Wind Telecommunicazi Banca IMI |
April |
| Spartan Capital Holdings |
Polkomtel |
|
6.16 |
Poland |
Poland |
Credit Agricole CIB, Trigon Dom Maklerski, Deutsche Bank |
Rothschild, Goldman Sachs, Nomura, ING |
November |
| Vodafone Group |
Vodafone Essar (33.02%) |
|
5.46 |
UK |
India |
Goldman Sachs, UBS |
Standard Chartered, UBS |
July |
| America Movil |
Telmex (33.03%) |
|
5.32 |
Mexico |
Mexico |
Citi Group |
Morgan Stanley |
November |
| Portugal Telecom |
Oi (25%) |
|
5 |
Portugal |
Brazil |
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March |
| Centurylink |
Savvis |
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3.09 |
US |
US |
Barclays Capital, Bank of America |
Morgan Stanley |
July |
| Level 3 |
Global Crossing |
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2.95 |
US |
US |
Bank of America Merrill Lynch, Citigroup and Morgan Stanley |
Goldman Sachs, Credit Suisse |
October |
| KDDI |
KDDI (9%) |
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2.84 |
Japan |
Japan |
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November |
| PLDT |
Digitel |
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2.39 |
Philippines |
Philipinnes |
ING |
Citigroup |
October |
Operator M&A activity ranked by deal value, 2011 Source: Dealogic and Global Telecoms Business
| Acquirer |
Target |
Vendor (where applicable) |
Value US$bn |
Acquirer Nationality |
Target Nationality |
Acquirer Advisors |
Target/Vendor advisor |
Date completed |
| HP |
Autonomy |
|
11.6 |
US |
UK |
Perella Weinberg Partners, Barclays Capital |
Qatalyst Partners, UBS, Goldman Sachs, Citigroup, JP Morgan Chase, Bank of America Merril Lynch |
October |
| Microsoft |
Skype |
|
8.5 |
US |
US |
No advisor |
JP Morgan, Goldman Sachs |
October |
| Texas Instruments |
National Semiconductor |
|
6.67 |
US |
US |
Morgan Stanley |
Qatalyst Partners, Goldman Sachs |
September |
| Consortium (members: Apple, EMC, Ericsson, Microsoft, RIM, Sony) |
Nortel patents |
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4.5 |
US, Sweden, Japan, Canada |
Canada |
Ericsson - SEB Enskilda |
Lazard |
July |
| Carlyle Group |
Commscope |
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3.9 |
US |
US |
JP Morgan |
Allen and Company LLP |
January |
| Qualcomm |
Atheros |
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3.64 |
US |
US |
Goldman Sachs, Barclays Capital |
Qatalyst Partners |
May |
| Carlyle Group |
Syniverse |
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2.6 |
US |
US |
Evercore, Barclays Capital, Credit Suisse |
Deutsche Bank |
January |
| Toshiba (60%) Innovation Network Corp of Japan (40%) |
Landis & Gyr |
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2.3 |
Japan |
Switzerland |
JP Morgan Chase & Co |
Credit Suisse, Lazard, Deutsche Bank, Goldman Sachs |
July |
| Echostar |
Hughes |
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2 |
US |
US |
Deutsche Bank |
Barclays Capital |
June |
| Nokia Siemens Networks |
Motorola Solutions network assets |
0.975 |
Finland/Germany |
US |
Barclays Capital |
Centerview Partners, Goldman Sachs, JP Morgan Chase |
May |
Vendor M&A activity ranked by deal value, 2011 Source: Dealogic and Global Telecoms Business
This year has seen some substantial deals as the operator and vendor sectors continue to consolidate even in the face of continued turmoil in the world’s financial markets.
The obvious deal that failed to complete in 2011 is AT&T’s proposed acquisition of T-Mobile USA for $39 billion and that makes for a less sensational deal at the top of the operator list.
However, it is clear that sector consolidation continues apace. Vodafone features twice in the list, first for its disposal of its 44% holding in French operator SFR to Vivendi for $11.3 billion in June 2011. That sale followed its successful divestment of its holding in Japanese operator Softbank last year for $5 billion and is consistent with chief executive Vittorio Colao’s strategy to dispose of shareholdings in operators in which it does not hold a majority stake.
Encouragingly for Vodafone, the year also saw it receive a dividend from its 45% holding in Verizon Wireless for the first time.
The flipside of that strategy is for Vodafone to bolster its holdings in operators where it does hold a majority. The UK-headquartered group increased its holding in India’s Vodafone Essar by just over 33% in a transaction with the Indian Essar conglomerate, valued at just over $5 billion.
Other operators have been consolidating. VimpelCom acquired Wind Telecommunications for $6.5 billion. The sale has seen Orascom Telecom Holdings chief executive Naguib Sawiris subsequently linked with proposed operator purchases in Switzerland and Austria as he looks to central and eastern European markets to build a new telecoms holding company.
“For me the top deal of the year is Vimpelcom/Wind. It sees a Russian operator diversify into an emerging operator and gain a top position in Italy,” says Philipp Meier-Scherling, head of telecoms for EMEA at Deutsche Bank.
“An interesting area is portfolio management where we're seeing a good amount of activity: France Telecom, for example, continues to move towards emerging markets, or Vivendi’s acquisition of [recorded music company] EMI and ownership consolidation of [French mobile operator] SFR. It will be interesting to see what Vodafone does following its exit from several assets.”
The long mooted acquisition of Global Crossing by Level 3 Communications also completed for $2.95 billion bringing the two long distance carriers together: see interview with Level 3 CEO Jim Crowe starting on page 16 of this issue.
Private equity clearly still has an appetite for investments in the sector, as demonstrated by Spartan Capital Partners’ $6.16 billion acquisition of Poland’s Polkomtel. The race to acquire Polkomtel was hotly contested by operator groups and other equity firms.
“No industry is completely insulated but, from a transaction perspective, 2011 has not been a bad year for telecoms,” adds Meier-Scherling. “We’ve seen important deals, market consolidation, leveraged buy-outs and the transformational Polkomtel acquisition which saw an entrepreneur put more than €1 billion of his own money on the table, something you don’t see very often.”
Finally, other operators took 2011 as an opportunity to tidy up their ownership structures. Mexican telecoms tycoon Carlos Slim Helú’s América Móvil acquired 33.03% of Telmex for $5.32 billion and in Japan KDDI bought back approximately 9% of its shares for $2.89 billion.
“There are interesting dynamics in the sector although we still haven’t seen incumbent consolidation across borders in Europe,” says Meier-Scherling. “But there is a lot of movement in the sector going into 2012. Telecom operators are favoured because of their predictable continuous cash flows. The challenge for 2012 is the market, but if anything gets financed, telecoms will.”
The vendor sector also saw significant activity with a series of billion dollar deals yet to complete. The largest of those is the $12.5 billion purchase by Google of Motorola Mobility. If that completes in 2012, Google will be able to protect and ensure the future of its Android operating system by owning its own device maker. The web search company has said Android will remain an open platform.
The largest vendor acquisition of the year was the acquisition of Autonomy by HP for $11.6 billion. The company’s software is designed to address unstructured data and will have significant applications in the telecoms market. Controversy, however, surrounds the deal — with Oracle’s CEO Larry Ellison claiming HP paid an over-inflated price. Recently appointed HP chief executive Leo Apotheker was subsequently fired and replaced by Meg Whitman, former CEO of eBay, who looked after the completion of her predecessor’s purchase.
Elsewhere, private equity interest in the sector continued. Private equity group Carlyle acquired both CommScope and Syniverse in combined investments in the sector totalling $6.5 billion.
Next year — or the very end of 2011 —is expected to see the completion of Ericsson’s acquisition of Telcordia from its private equity owners Warburg Pincus and Providence Equity Partners. The deal for the New Jersey-headquartered OSS specialist values it at $1.15 billion, lower than the $1.35 billion the firms paid in 2006. Reports suggest the firms paid down Telcordia’s debt and have held on to some cash, thereby turning a slim profit on the investment.
Another significant deal was Microsoft’s $8.5 billion acquisition of Skype, which will see the software firm integrate Skype into a range of Microsoft products to broaden the calling service’s reach and accelerate its growth.
Nokia Siemens Networks also completed its $975 million acquisition of Motorola Solutions’ network access division. Long held up due to anti-trust regulatory hurdles in China and the US, the deal — along with Google’s acquisition of the Motorola Mobility business — will see the end of Chicago-headquartered Motorola in its independent form.
The tale of another North American telecoms vendor is also reaching its end. Following last year’s acquisition of various product lines by Ciena, Genband and Ericsson, the administrators of Nortel Networks auctioned the company’s patents.
Google originally entered the fray with a $900 million bid but was outgunned by a consortium of rivals composed of Apple, EMC, Ericsson, Microsoft, RIM and Sony. The six companies spent $4.5 billion securing decades’ of intellectual property innovation. Patent lawyers across the globe will be watching the consortium’s next moves. GTB
Further reading from Global Telecoms Business:
Vodafone to sell SFR stake for €7.95bn 04 Apr 2011
VimpelCom gets approval for Wind deal 18 Mar 2011
Polish media tycoon to buy Polkomtel 01 Jul 2011
Vodafone buys $5bn Essar venture stake 01 Apr 2011
Brazil approves Portugal Telecom's Oi bid 01 Nov 2010
Jim Crowe plans budget to expand Level 3 further after Global ... 19 Dec 2011
PLDT to buy Digitel stake for $1.7bn 30 Mar 2011
América Móvil plans 100% Telmex stake 12 Oct 2011