Shaking on a Deal

Mergers, acquisitions and a stay of execution

Around this time last year all the talk in the telecoms industry was one of consolidation. It would be fair to say that in the intervening 12 months a lot of that ‘talk’ has turned into action.

You don’t have to look too far to see a number of substantial market changes in the offing at various stages of completion, or not as the case might be.  The EU, in between dealing the possibility of a Brexit scenario are reviewing the proposed merger of O2 and Three, great from an infrastructure perspective but the jury is perhaps still out on the possibility of resultant price increases. Vodafone’s 50 50 joint venture with Liberty Global while in the Netherlands may yet well have implications for the UK market, although some industry commentators are arguing that a tie up with Sky would make more sense than with Liberty Global owned Virgin Media. The acquisition of EE by BT is an interesting one with BT recently declaring its intention to retain the EE brand, for the foreseeable future anyway.

Aside from BT’s acquisition activity, the recent publication of Ofcom’s Strategic Review of Digital Communications has shone a light directly on the possibility of BT being obliged to open up its Openreach broadband business to competitors and operate it as de facto independent business as opposed to its current core BT business status.  Such a move will undoubtedly be welcomed by a large swathe of potential investors and of course, customers!  Locally, this development would provide greater transparency and clarity on the government funded strategic roll out of the broadband network in Northern Ireland.  Greater reinvestment of the significant profits derived from Openreach will help create a step change in the pace of broadband development across Northern Ireland which provides the communications platform on which Northern Ireland business will derive future growth.  Access to a fast, “reliable” broadband service is on a par with other business utilities like electricity which are absolutely fundamental to the successful operation and growth of virtually every organisation and as such needs to be accessible and cost competitive, a scenario which unfortunately does not exist for many organisations currently.  The spin off of Openreach could herald an era of unprecedented telecoms investment in this region which would help to drive significant savings and customer service benefits for Northern Ireland businesses.

With so much activity going on it’s clear that the market needs time to settle both for telecos to firm up their investment plans and to allow business users to make informed decisions on their supplier of choice.  One thing is certain, change will be the only constant in 2016.


First Published: 15/03/16

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