The telecommunications sector is the best example of how rapid technological developments, in combination with regulatory reform, both enable and force companies to seek new partners across national and technical borders.
As deregulation has opened up national telecom markets to foreign competitors and as technological advances have made possible even global communication services, large telecom operators, many of them former national monopolies, have become global operators by acquiring and forming alliances with local (regional) telecom companies.
Many telecom operators have pursued dual strategies: intra-regional (full) mergers as a way to enter neighbouring markets and inter-regional alliances to enter the markets in other regions, where they know less. As a consequence, both cross-border alliances and M&As have continued to rise since the middle of the 1990s, and especially the latter has accelerated in recent years.
While the 1 300 international alliances in the latter half of the 1990s were only twice the number in the first half, the 1 055 cross-border M&As in the second half of the decade were more than five times the number in the first half. The deal value of M&As in the latter half of the 1990s (US$244.3 bn) is more than seven times that of the first half (US$34.1 bn). Telecom carriers’ recent focus is on wireless communications: acquisitions of regional mobile telecom operators have been prominent, for example, France Telecom’s US$45.9 bn takeover of Orange PLC (UK) in August 2000.
• New Patterns of Industrial Globalisation: Cross-border Mergers and Acquisitions and Strategic Alliances, OECD, 2001.
©OECD Observer No 229, Novemebr 2001