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‘World Telecom M&A Deals at $49 bn’

There has been a 29 per cent fall from 2008

With communication becoming the most important tool for people across the world in getting about comfortably in both their social and professional lives, it has fuelled an astonishing rise in the number of people owning and seeking a personal gadget. Looking for a piece of action in the ocean of opportunities thereby engendered are the telecom firms.

The numbers are huge, as is evidenced by Bharti Airtel celebrating the fact that it has crossed the 100 million connections mark and it is looking good for much more.

The world over, the same kind of growth potential is driving telecom firms to look for joint ventures, failing which they eye takeovers.
According tracking firm Dealogic, the mergers and acquisitions volume in the telecom arena has almost touched the $50 billion mark in 2009 -- $49.2 billion via 410 deals to be more precise.

While the major driver of that amount has been the takeover of Liberty Entertainment by DirectTV Group for $14.7 billion and also of Verizon Communication by Frontier Communication, yet every company that can martial its funds to a large enough extent, is looking for a piece of the pie.

However, this figure is down 29 per cent from the $69.8 billion collected in the same period in 2008 through 549 deals, yet that has been attributed to the increasingly deleterious effects of the global meltdown and the consequent tightening of liquidity, with no financial entity looking at giving loans to anyone, fearing the worst.

At home in India, Bharti Airtel too has signalled a more active approach to expansion. It has indicated that it is open to acquiring domestic telecom operators, with the intention of adding another 100 million subscribers in the next three years. The most likely targets will be the new telecom operators which are struggling to establish themselves in an already saturated sector, where competing with the biggies is a huge task.

On the general Indian M&A front though, the same kind of slowdown can bee seen. According to  a study carried out by Grant Thornton, the M&A activity by India Inc for the month of April alone, saw 20 deals amounting to $427 million. The figures for April 2008 stood at a much higher 42 deals involving some $1.1 billion. Out of these, 7 deals were cross-border ones.