Media and telecom companies continue to tease investors with tie-ups but consummation remains rare. For instance, American TV-and-film titan 21st Century Fox (US: FOXA) has ceased its pursuit of rival Time Warner (US: TWX) after its $80bn (£47.7bn) bid was rebuffed. And US carrier Sprint (US: S) has scrapped its mooted $30bn proposal for rival operator T-Mobile (US: TMUS) after failing to win over antitrust regulators.
European players have also courted their peers. Deutsche Telekom (DTE), which owns most of T-Mobile, recently rejected a $15bn offer for the carrier from French operator Iliad (Fr: ILD). And O2-owner Telefónica (Sp: TEF) has offered €6.7bn (£5.3bn) for media giant Vivendi’s (VIV) Brazilian telecom GVT, while Telecom Italia (Ita: TIT) is contemplating a counter bid.
Consolidation isn’t unusual in either industry as it boosts companies’ pricing power and clout in negotiations, while also opening up cross-selling opportunities. And with the proliferation of mobile devices, 4G superfast wireless technology and online video streaming straining networks and infrastructure, the benefits of network sharing, cost-cutting and synergies have grown.
Those factors help to explain why the value of global telecom deals doubled to a record $230bn in the first quarter of this year. That figure includes $42bn in competing bids from Bouygues and Altice for French telecom SFR as well as Vodafone’s (VOD) purchase of Spain’s Ono for $10bn.
