Preqin’s Buyout Deals Analyst shows that 2012 recorded the highest number and aggregate value of private equity-backed buyout deals in the telecoms and telecom media industry since the previous peak in 2007. Fifty private equity-backed buyout deals in the telecoms and telecom media industry were observed in 2012, valued at $12.5bn collectively, compared to the 52 buyouts witnessed in 2007, which were valued at an aggregate $54.6bn. This shows that telecoms and telecom media buyouts in 2007 were at similar levels in terms of number to 2012, however the aggregate deal value witnessed in 2012 was 77% lower than the peak in 2007.
This return of a large number of investments in the industry could be a result of advancing technological change within the industry; in particular, the rise of 4G technology, which is likely to be sought after by businesses looking to improve efficiency with faster internet connections. The onset of the global financial crisis impacted the telecoms and telecom media industry profoundly, largely due to its reliance on high capital expenditure and pressure on costs. This is highlighted by the average deal size plummeting from $2.1bn in 2007 to $106.1mn in 2009. There has been some recovery since, with the average at $625mn in 2012, but this is very distant from the highs reached five years earlier.
Prior to the onset of the global financial crisis, the most prominent region in terms of the number of private equity-backed buyout deals in the telecoms and telecom media industry was Europe. From 2010 to present, this prominence has switched to North America, except 2011, which again saw Europe as the leading region in terms of the number of buyout deals. In 2012, regions outside North America, Europe and Asia witnessed the highest number of deals of any year in the telecoms and telecom media industry in the period from 2006–2013 YTD.
In regards to the number and aggregate value of private equity-backed exits in the telecoms and telecom media industry, the trend is similar to the number and aggregate value of private equity-backed buyout deals in the industry from 2006 to present in relation to two peaks witnessed in 2007 and 2012, as well as a marked decrease as a result of the global financial crisis. So far in 2013, there have been 17 private equity-backed exits in the industry valued at $5.9bn, which suggests the industry is on track to reach similar levels of exit flow to 2010–2012, when the number of exits in the industry ranged from 23–24 per year. However, the aggregate exit value is perhaps unlikely to mirror the $17.9bn witnessed in 2012.