Signs of a market recovery

Matt Walker/Ovum
17 May 2010
00:00

Telecom IPOs and M&A deals picked up in the second half of 2009 after years of dormancy

Interest in telecom public stock offerings and M&A deals began to improve in the second half of 2009. The renewed public offering and M&A activities, brought on by a decline in market volatility, have made it easier for companies to cut costs or raise operating capital. But venture capital investment in telecoms sank in the fourth quarter, in a development that could hamper small-scale innovation.

Venture capital-backed start-ups have been responsible for many important innovations in the telecom industry - both directly through their own creations and indirectly by driving larger vendors to work harder. As a result, the recent drop in VC support for telecom start-ups is disconcerting.

The telecom market attracted around $1.6 billion in venture capital in 2009, down 33% from the year before. And just 45 VC deals were made in Q4, well below the average. Around $370 million was raised this way during the quarter, compared to $571 million in 4Q08.

Not all of this decline can be attributed to the unstable investment climate during the financial crisis - the decline in VC in the overall technology sector was significantly less severe.

The VC flow split among regions and segments (vendors versus service providers) remained steady during the downturn: roughly 80% of all telecom venture financing in 2009 went to vendors in North America.

And only two of last year's ten largest VC deals were for service providers - UQ and Tarpon.

Pages

Follow Telecom Asia Sport!
Comments
No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.