M&A may look tempting, but dangers lurk

First published on Mobile World Live, 4 November 2013

More M&A involving mobile operators looks on the cards. According to Ernst & Young’s recently-published H1 2013 report on the M&A sector, 35 per cent of company executives surveyed – from all industry sectors, not just telecoms – said they were likely to pursue acquisitions. That compares with just 25 per cent who thought the same a year ago.

The consulting firm further found that 65 per cent of executives expected the global economy to improve over the coming year, up from a miserly 22 per cent a year ago. Growing confidence in the economic outlook should make boardrooms less reticent about taking the M&A plunge.

Softening M&A attitudes will auger well for some mobile operators. It’s often said M&A is one of the few areas of human activity where it pays to be victim. Deep-pocketed predators (or at least ones that can get their hands on plenty of debt financing) invariably boost the share price of their intended target when word gets out.

Randall Stephenson, for one, is on the lookout for acquisitions. The boss of AT&T has repeatedly said he would buy mobile assets in Europe if they added value. Carlos Slim, billionaire and owner of America Movil, can’t be ruled out either from further European expansion. He may have walked away from the negotiating table to buy the rest of KPN, but Eelco Blok, the Dutch operator’s chief executive, says later discussions with the Mexican tycoon – to thrash out a price – are still a possibility.

The delay of tougher EU data protection laws, most likely until 2015, also makes cross-border M&A less risky.

A European parliamentary committee, no doubt reacting to allegations from whistle-blower Edward Snowden that the US National Security Agency snooped on EU citizen data, voted on 21 October for stricter controls on how personal information is shared or transferred to non-EU countries (plus heavier penalties for non-compliance).

Thanks to successful lobbying from the UK government, however, it looks as if Brussels will not decide on the tougher proposals until 2015 at the earliest. The EU parliament vote was originally pencilled in for 2014. It means due diligence on cross-border M&A involving EU citizen data – at least over the next 18 months or so – will not be as fraught as it might have been.

Vodafone, muscled up from the sale of its Verizon Wireless stake, is another M&A driver (assuming AT&T doesn’t make a move). Kabel Deutschland has already been acquired to beef up its broadband assets in Germany, while Vodafone has made no secret of its desire to shore up bundled fixed and mobile offers in other markets.

And faced with growing regulatory and competitive pressures, mobile operators of all hues will be tempted by consolidation and the prospect of greater cost efficiencies – particularly if it can remove a direct rival in the process. Hutchison’s acquisition of Orange Austria is a prime example of this type of thinking.

M&A, however, is hardly a walk in the park. Achieving economies of scale is one thing, but if the unlocking of so-called “synergies” relies heavily on awkward back-office tasks – such as unified customer databases or having billing systems identify every customer in the newly-merged entity – then M&A may well be much messier and more expensive than planned.

Analysts at Bernstein Research reckon it took two to three years for Telefonica, Portugal Telecom and Deutsche Telekom to put in place fully integrated IT systems for their fixed and mobile operations. And this was among people working for the same company. A clash of two company cultures can only make the task harder.

It partly explains why Robin Bienenstock, a London based analyst with Sanford C. Bernstein, believes Vodafone’s acquisition of Kabel Deuschland has all the makings of a disaster.

Pointing to what she sees as Vodafone’s poor track record of integrating fixed-line assets with mobile operations, Bienenstock said in a research note that Vodafone’s acquisition of the cable company is “likely to prove more disruptive and value destructive than the company hoped” and that “consumer experience will be inconsistent” and “execution expensive and complex”.

Careful due diligence in the M&A run-up, along with CIOs exchanging information on how customer and billing data might be structured and harmonised – to help smooth the path of IT integration – might be one way forward. Sadly, there’s no quick fix.

Tagged , , , . Bookmark the permalink.

9 Responses to M&A may look tempting, but dangers lurk

  1. simon says:

    Hello, it’s Simon here!
    I work as an academic writer and have created this content with the intent of changing your life for the better. I started honing my writing abilities in college. I learned that my fellow students needed writing help—and they were willing to pay for it. The money was enough to help pay my tuition for my first semester of college.
    Ever since college, I have continued to work as a professional writer. I was hired by a writing company based in the United Kingdom. Since then, the research papers that I have written have been sold around Europe and the United States.
    In my line of work, I have become familiar with hearing, “Simon, can you help me meet my writing assignment deadline?” I know that I can provide this service.

    Academic Writer – Simon – How To Succeed In Academic WritingTeam

  2. RichardKit says:

    Of course, the language barrier may turn into a big pitfall with your way, In this instance. But in the event you’re scheduling on hunting for a girlfriend on some international dating website, you almost certainly received’t have to manage this issue in any respect.

    Be simpler. Certainly, you want to get noticed from your probable competition, however you can’t even envision how much honesty and simplicity necessarily mean sometimes. These characteristics are rare among Adult males, so girls cherish them.

    We think that you mustn’t get odds On the subject of finding a match, so why acquire an opportunity wherever else? 

    Compared to youthful Russian women who may be just beginning off in life, a mature Russian lady tends to be a lot more unbiased as they’ve got presently set up their Professions and possess their unique cash just like on your own. You might find mature older Russian women is not going to require you to definitely finance them as they may already be founded a way, numerous older Russian women will currently possess their particular condominium , which can be incredibly attractive to quite a few Males in search of a far more mature Russian women for marriage.

    You will often find older mature russian singles  far more appealing thus far because they make for better dialogue from their existence encounters, you are going to find older Russian women quite intriguing to chat with and doubtless you’ll have a lot more in popular with Every other than you imagined.

    Certainly you might state that the specific situation isn’t well known in compact provincial cities and you also are correct, but in this case, why go abroad? Why not merely go to a significant town in Russia or Ukraine? It truly is less of a challenge, no need to know another language.
    married agency

    Looking for really like down the road in everyday life could be a daunting prospect but you haven’t any have to have to fret, Over60sDatingOnline.com is right here that may help you!

    Overall, respondents most popular free internet sites like OkCupid, Tinder and Grindr over paid out web pages like Match and eHarmony, partially due to benefit.

    It doesn’t matter how first rate, wealthy, or sweet you are, you might want to place a great deal of effort to influence a Russian girl to move for your nation. That’s why it’s better to obtain this issue determined as rapidly as you can.

    But if an acquaintance wants to set you up on the date, Get it done. Your friends know you well enough to be aware of which kind of person will click with you. This is your best scenario state of affairs for meeting people IRL, so don’t roll your eyes at it.

    Here is the listing of dating internet sites for you personally in the event you want to Solid the widest Web to meet essentially the most people possible from many areas and backgrounds. The choice could be to work with a not-so-normal dating internet site to find definitely precise dates.

    As you’re a liable and sea rouse human being looking for your mature Russian bride you should not have any challenges here and in fact will by now be well in advance of other man’s looking for a Russian women. 

    But you have probably heard concerning the a lot of horror tales about Adult males becoming cheated by Russian women (Ordinarily extremely youthful women) You might have heard about inadequate good quality Russian dating web sites with faux photos, or Websites that function through the PPL strategies. We have now saved you the trouble of checking websites out.

    The small existence expectancy in Russia is attributed to vodka, according to loads of significant research. When our Canadian and European men Enjoy athletics and reasonable ingesting, Slavic men smoke and consume. The end result isn’t astonishing along with the studies prove it: in Canada the male populace outnumbered the feminine populace.

  3. alton says:

    Thanks for stopping by my page! I’m Alton Sawyer.
    Even though I jokingly credit my mother for my writing talent, I know that it is a skill I have fostered from childhood. Though my grandmother is a writer, I also started out young.
    I’ve always had a way with words, according to my favorite educator. I was always so excited in history when we had to do a research assignment .
    Now, I help current pupils achieve the grades that have always come easily to me. It is my way of giving back to students because I understand the troubles they must overcome to graduate.

    Alton – Academic Writer – 10 Most Common College Freshman Mistakes Company

  4. kalem says:

    Hello everyone , I’m Kalem Warner.
    Welcome to my about page. I started writing in middle school after a creative writing assignment for my English teacher. I did creative writing for a while before I thought about doing something else.
    I had always loved doing non-fiction writing because I’m passionate about learning. When you combine writing talent with a love of learning, dissertation writing only makes sense as a job.
    I’m passionate about helping the students of the future in their school career. When they get too busy, I am there to help.

    Kalem – Academic Writing Help – Writing recources hints Confederation

  5. montell says:

    Hello All
    Thanks for checking out my writing website . My name is Montell Rivera.
    I have worked several years in this niche. My interest in writing started at a young age. I wrote journaled as a child and eventually went on to work with my school newspaper.
    This early tryst into reporting eventually led me to academic writing. There is plenty of work for skilled writers. I specialize in dissertations , but have the skills to do all types of academic writing.
    Reach out for more information about rates and a price quote. I’m looking forward to helping you.

    Academic Writer – Montell Rivera – Seven tips for writers Corps

  6. symnSmurn says:

    I like this compilation released by MojoHeadz Record, but I don’t know what style of music it is. https://www.amazon.com/Mojoheadz-Records-Explicit-Various-artists/dp/B08M8XL42F

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>