Ok, it’s taken a couple of weeks following the US edition, but it’s time to take a look back at the global telecom and internet infrastructure consolidation we’ve seen in 2014. Much of this year’s consolidation waltz has been in Europe, although there’s been some very interesting and complementary notes coming out of Latin America.
There have been two main sides to international network consolidation activity this year. There are the shifting chess game of global ambitions by the various nationally dominant providers and their larger brethren driven by the wireless world, and there is a smaller, private-equity-driven game going on at the fiber infrastructure level.
At the larger end of the spectrum, we saw some companies shoring up their home markets as others moved to swap out their weaker markets. This year saw Vodafone continue spending the huge cash windfall from the sale of its Verizon Wireless stake, buying Spain’s Ono to bolster its existing presence there. Altice is in the process of buying Portugal Telecom from Brazil’s Oi, while Telefonica won the auction for Vivendi’s GVT in Brazil, and KPN has taken full control of Reggefiber. Tele2 is busy trying to leave Norway by selling out to Teliasonera, but regulators may be hard to convince on that one. Iliad made a head fake toward T-Mobile that didn’t fool many. And Teliasonera and Telenor are busying combining their efforts in Denmark. And Mexico’s America Movil took majority control of Telekom Austria achieving one of his European ambitions at last.
On the other side of the planet, after years of false starts we saw some APAC regional submarine fiber finally change hands. Telstra just last week agreed to buy Pacnet, adding assets that take it deeper into complementary markets. I expect we’ll here more from them in 2015 on the M&A front as the NBN project back home keeps their eyes turned overseas.
Meanwhile, we’ve got unresolved situations all over the place as the slower pace of negotiations amongst the global telecommunications players keeps things in play. BT is supposedly looking hard at EE, which will shake up the UK market in a big way. Telecom Italia has pretty much made up its mind to shore up its wireline infrastructure in Italy by purchasing MetroWeb’s infrastructure from the private equity groups that acquired it a couple years back. Plenty of other assets are in similarly in play across Europe, Latin America, and Asia.
At the regional fiber level, far beneath the interest of the wireless-driven larger players, we also saw the beginnings of a consolidation wave — although as always things are in less of a hurry than in the USA. Zayo led the charge with significant metro and regional fiber purchases in both the UK and France. By buying Geo and Neo, and then adding some distressed assets from the Digital Region network project, Zayo now has much more than the essentially single-market foothold on the continent it started the year with.
But Zayo wasn’t the only fiber deal-maker in Europe. Interoute also made a key move in the UK with the purchase of Vtesse, and CityFibre made one of its own taking over Coventry’s metro network. euNetworks landed the Alpine network of Fibrelac, even as Columbia moved to take full control over euNetworks itself and extract its Singaporean listing anchor. And further south, the private equity group Cinven spent some $680M to buy GNFT’s Spanish and Latin American (there it is again) networks
But that’s just the tip of the iceberg of potential consolidation in the regional and metro fiber markets of Europe. It’s harder to do business as a pan-European network infrastructure company than it is to take on assets of similar size in the US, simply because the national borders are real operational boundaries and you need many more different flavors of local DNA to do it. But that just means it will take longer for the various consolidation platforms to make their moves, the economics will still drive things forward.
Next up: cloud and data center consolidation, and then a look ahead with a few predictions for 2015.
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