But deal flow slowly picked up through the second half of 2009, reaching a peak in Q4. The quarter saw 14 telecom IPOs worldwide - the most since 2007.
Over the last nine quarters, the average CSP deal was just under $300 million, nearly triple the size of the average vendor offering. But this average has been skewed by the occasional very large CSP deal, including a $3.2 billion placement by Malaysia's Maxis in 3Q09, and roughly $1 billion placements by India's Reliance Infratel and Vodafone Qatar in 1Q09.
Infratel's IPO also reflects growing interest in cell tower sharing, an interest also manifesting in increased M&A, VC and private placement activity by tower companies in North America and some emerging markets.
Infrastructure sharing is in fact one of the strongest investment themes in the market right now, as it appears to allow CSPs to reduce costs without stripping away their ability to differentiate where it matters, on services.
The recovery has been more gradual for the vendor IPO market, but it has commenced. This indicates that there will be a continued role for specialized vendors, even though only some players will survive going forward.
M&A showing signs of life
Telecom M&A slowed to a halt in 3Q08, but improved market stability has since raised confidence around valuations, and more big deals are getting done.
The deal count stood at 713 in 2009, in line with the 698 total in 2008. Total deal value meanwhile fell 13% in 2009 to $99 billion. But in the fourth quarter, deal value was up 70% year-on-year to $39.8 billion.
Many of these CSP deals have been brought on by a need to cut costs, which leads to both layoffs and M&A. These deals are not at all an indicator of a great market climate, but even they still require enough calmness in the market to support agreement on valuations.
North America is the largest M&A region, accounting for 38% of the total $246 billion of transactions occurring in the past nine quarters; Europe follows with 30%, then RoW (Middle East & Africa, Latin America) with 18%, and Asia-Pacific last at 14%.
This leaves plenty of untapped opportunity for M&A in Asia, and in 2010 we have already seen the first evidence of this. Bharti, which tried unsuccessfully to buy South Africa-based regional mobile carrier MTN in 1H09, is now attempting to acquire Warid's Bangladesh unit and Zain's Africa operations.
Matt Walker is a principal analyst in Ovum's network infrastructure practice. For a quarterly look at telecom M&A, vendor financing, private placements and public offerings, contact Tanisha Kaul for info on its Telecoms Knowledge Center