Led by Bharti-MTN deal global telecom M&A vol touches $88.3 bn

Driven by the proposed $23-billion mega deal between the Sunil Mittal-promoted Bharti Airtel and South African MTN group, merger and acquisition volume in the telecom space worldwide stood at $88.3 billion this year.      

According to the deal-tracking firm Dealogic, global telecom volumes in 2009 stood at $88.3 billion through 571 deals. This, however, represents over a 5 per cent decline from the period a year ago. In the corresponding period in 2008, there were deals worth $93.4 billion.     

"This represents the lowest deal count since 1998 year-to-date (YTD) and the lowest volume since 2002 YTD," Dealogic said.     

The Bharti-MTN deal with a potential value of $23 billion is the largest M&A deal in the telecommunications sector in 2009 YTD, it said.      

An analysis of telecom deals across the world shows that the US is the most targeted nation for M&A. The deals in US accounted for 50 per cent of the global M&A volume in 2008.     

The top five countries in the telcommunication M&A deal count are US which accounted for 142 transactions followed by China (37), South Korea (31), Japan (31), United Kingdom (29) and Russian Federation (25).

JP Morgan leads the M&A advisory ranking for telecom targeted M&A in 2009 YTD with $33.4 billion, followed  by Goldman Sachs with $32.1 billion and Bank Of America- Merrill Lynch with $24.8 billion.     

The Bharti-MTN deal would involve a complex structure in which both the entities would pay cash and stock for stakes in each other. As per the exploring agreement, MTN would acquire around 36 per cent economic interest in Bharti Airtel while Bharti Airtel would acquire 49 per cent stake in MTN.     

The two companies signed an agreement in May this year to hold exclusive talks for a deal that could include $10 billion in cash and $13 billion in shares and leading to a combined entity of $20 billion in terms of revenue and 200 million subscribers globally.     

Some other major global telecommunications deals include Directv Group's $14.7 billion acquisition of Liberty Entertainment, US-based Frontier Communications' $8.6 billion acquisition of Verizon Communications, Canada Pension Plan Investment Board's $4.8 billion investment in Macquarie Communications Infrastructure for 81.67 per cent stake in the company.