While data centres have attracted much of the investor capital in digital infrastructure, telcos are now proving an attractive proposition for investors. Large capex spends on infra upgrades have largely been completed, and there are signs that antitrust restrictions on mergers between large telcos could be softening. This has resulted in a flurry of deals in the first half of 2024 – here are ten of the most important merger and acquisition deals in the telecoms and wider connectivity sector so far this year.
1. Swisscom’s acquisition of Vodafone Italia
Announced: March 2024
Value: €8 billion
Status: Approved by Italian government in May 2024
Vodafone has agreed several deals in recent times to slim down its European operations, including the merger of Vodafone UK with Three and the sale of its Italian and Spanish operations. Vodafone Italia was the next unit of the telco in the shop window, and a deal was agreed in March 2024 to sell the unit to Swisscom for €8 billion. Following the acquisition, Swisscom intends to merge Vodafone Italia with its Italian subsidiary Fastweb.
Announcing the deal, Vodafone’s CEO Margharita Della Valle said, “The sale of Vodafone Italy to Swisscom creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years.”
2. HPE to acquire Juniper Networks
Announced: January 2024
Value: $14 billion
Status: subject to regulatory approval; expected to close early 2025
On the network equipment and services side, solution provider Hewlett Packard Enterprise (HPE) agreed a $14 billion deal to buy Juniper Networks, helping HPE to capitalise on explosive AI demand among its customer base, along with the continued move to hybrid cloud services by enterprises. The deal will double HPE’s networking business at a stroke.
“HPE’s acquisition of Juniper represents an important inflection point in the industry and will change the dynamics in the networking market and provide customers and partners with a new alternative that meets their toughest demands,” said Antonio Neri, president and CEO of HPE when the deal was announced.
3. Orange – Masmovil merger
Announced: March 2024
Value: €6 billion
Status: Approved by European Commission
Orange and Masmovil, two large players in the Spanish connectivity market, announced a merger in March 2024 to create a joint venture boasting over 37 million broadband and mobile lines among its new customer base. Jean Francois Fallacher, CEO of Orange France who also had a three-year stint in charge of Orange Spain, has been chosen as non-executive director to lead the new joint venture, which will serve more than 30 million customers. Prior to being officially announced, the merger was greenlit by the European Commission in February 2024.
4. Zayo carves out its European business
Announced: May 2024
Value: Undisclosed
Status: In progress
US-based fibreco and network provider Zayo announced in May 2024 that it would separate its European business from the rest of its global and North American operations. Thew new business will have bases in London, Paris, Stuttgart and Sofia, and will be run by existing Zayo Europe CEO Colman Deegan.
This is not a large change structurally, as Zayo Europe operates a fibre network across eight countries that is already largely autonomous, as Deegan told Capacity after the deal was announced: “for the most part, nothing is going to change”. Full legal separation of the two businesses is expected by June 2024, although they will remain under the same ownership structure established when Digital Bridge and EQT Infrastructure took Zayo private for over $14 billion in 2020.
5. Iliad Group buys 19.8% stake in Tele2
Announced: February 2024
Value: $1.3 billion
Status: All deal tranches to complete by Q3 2024
The Iliad telecoms group, owned by French investor Xavier Niel, agreed in February 2024 to take a 19.8% stake in Swedish telco Tele2, acquiring the stock from the investment company Kinnevik, previously the telco’s largest shareholder. The stake will give Iliad 30% of Tele2’s shareholder voting rights. Following the deal, Iliad Group CEO Thomas Reynaud was nominated as the new chair of Tele2, consolidating Iliad Group’s influence on the telco’s operations.
The deal structure is more complex than average, being split into three tranches. In the first, Freya bought 4.5% of B shares, representing 3.5% of the voting rights, the second larger transaction will see 18.8% of Tele2’s share capital change hands, and the final 1% of shares included in the deal will pass to Iliad in the third quarter of 2024. This latest sale continues Kinnevik’s attempts to offload its Tele2 interest after the investment group sold a quarter of its stock in the telco in May 2022.
6. PIF acquires 51% stake in TAWAL
Announced: April 2024
Value: $2.9 billion
Status: Completed
Saudi Arabia’s Public Investment Fund agreed in April 2024 to buy a 52% stage in TAWAL, a towerco previously carved out from Saudi operator stc. In turn, TAWAL will be merged with Golden Lattice Investment Company, a portfolio of towers that PIF previously acquired from Zain Group in 2022. The deal adds over 8,000 tower sites to the portfolio of TAWAL, which made its entry into the European tower market in 2023 by acquiring United Group’s portfolio of towers in Bulgaria, Croatia and Slovenia, adding 4,800 towers to the company’s count. Given the %5.85 billion valuation of TAWAL cited by PIF when the deal was announced, this puts a price tag of nearly three billion dollars on the transaction.
This deal is unlikely to be the last tower transaction in Saudi Arabia in the near future. TowerXchange reported at the time of the PIF/TAWAL deal that the Kingdom’s third operator Mobily has put the wheels in motion regarding selling the 8,069 towers it owns, with PIF most likely to snap them up.
7. SES to acquire Intelsat
Announced: April 2024
Value: $3.1 billion
Status: In progress
It’s take two for this tie-up between two of the world’s biggest satellite operators. After a proposed merger between the two was binned in June 2023, SES agreed in April 2024 to spend $3.1 billion on acquiring its US-based rival Intelsat.
The revival of the deal comes after Intelsat walked away from the previous attempt to secure a tie-up, which would have been worth up to $10 billion, with no comment as to why. But the two companies came back to the negotiating table in early 2024, and this latest tie-up will deliver a combined fleet of over 100 geostationary earth orbit and 26 medium earth orbit satellites, helping the combined company compete with LEO-based operators such as Starlink and Amazon’s Project Kuiper.
8. KKR’s Telecom Italia fixed network bid rumbles on
Announced (initially): November 2021
Value: up to $22 billion
Status: awaiting EU competition clearance
No major European telco had tried to offload its landline network until the enormous $22 billion bid by investment group KKR for Telecom Italia’s fixed line network was intially announced in November 2021 – but major shareholder Vivendi was not happy at all about the deal.
Since then, the status of the transaction has depended on various approvals both within and outside of the companies involved. Telecom Italia approved the deal in November 2023 and the deal was approved by the Italian government the following January. However, the deal has run into further hurdles since then, with Reuters reporting EU competition concerns in April 2024. This led to the development of ‘remedies’, or ways in which the impact on competition can be mitigated, by KKR, with announcement on exact measures expected by the end of May 2024.
Update 24 May: Politico.eu reportsthat KKR did not offer concessions by the required date.
9. KDDI takes a 50% stake in Lawson
Announced: February 2024
Value: $3.4 billion
Status: Complete
A rare example of a telecoms company making M&A moves outside of the sector, Japanese mobile operator KDDI spent $3.4 billion on a 50% stake in convenience store operator Lawson, with the deal closing in April 2024 after being announced two months prior.
Faxed with fierce competition in the Japanese connectivity market, KDDI is looking outside of the box for future revenue opportunities. The deal for Lawson gives the telco a huge amount of customer purchase data , which it intends to use in order to sell its banking and financial services as well as promoting its connectivity and subscription offerings within Lawson’s 14,000+ stores across Japan.
10. NTT Docomo acquires 66% stake in Orix Credit
Announced: March 2024
Value: $500 million
Status: Complete
Another Japanese telco looking for additional revenue sources is NTT Docomo, which announced the acquisition of 66% of Orix Credit, a lender specialising primarily in B2C finance. Japan’s telcos are scrambling to create what are known as ‘closed ecosystems’ – in other words, revenue streams outside of their core area – and financial services is a popular target for acquisition. KDDI and Rakuten both offer various financial, taking advantage of their household brand status and gigantic customer bases, and NTT Docomo’s latest deal follows its acquisition of Monex in late 2023.
