Experts at international law firm Eversheds analysed the total number and value of telecoms deals over the past few years. In the fixed line sector, the number of deals done stayed constant from 2004 to 2005 (in both years there were 210 deals) but the value rose significantly from £47.3bn to £124.7bn.
However, deal values have yet to return to the high point of 1999, during the height of the dotcom boom. Back then, although only 74 deals were done, total values in the fixed line market exceeded £300 billion.
In the telecoms sector overall, the number of flotations grew by almost 50% from 2004 to 2005. There were 63 telecoms IPOs last year, a continuing recovery from the dotcom bubble that led to 259 flotations in 2000 but only 22 in 2002.
Keith Froud, corporate partner in Eversheds’ telecoms group, comments: “Although a lot of attention remains focused on the mobile telephony market, the fixed line sector continues to be a vibrant one for corporate activity. The massive growth in online services over the past few years has sparked a real renaissance among landline operators.
“But as anyone who went through the dotcom bubble will tell you, it’s not always a sector for the fainthearted. We’re finally seeing a return to the pre-bubble activity levels, with investors once again keen to look at new technologies. Both public markets and private equity funds are heavily involved.
“Across the globe, telecoms providers are looking to grow through takeovers, M&As and fundraising and that’s definitely keeping the market buoyant. The main difference between now and the dotcom era is that only companies with strong business plans are attracting interest.”