ARTICLE
10 September 2024

Telco's M&A Train Is Leaving The Station – How To Keep Deals On Track

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AlixPartners

Contributor

AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges.
The M&A game is well under way in the Telco industry. Several recent moves – including T-Mobile pushing into the fiber space to Verizon's latest deal with Frontier – indicates a decisive flight towards convergence is taking place.
United Kingdom Corporate/Commercial Law
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The M&A game is well under way in the Telco industry. Several recent moves – including T-Mobile pushing into the fiber space to Verizon's latest deal with Frontier – indicates a decisive flight towards convergence is taking place.

In the deal world, 1+1 is intended to equal three. However, a lot needs to be done to make the 1+1 = 3 equation work.

The journey starts on the regulatory front. Some mega deals may take 18 or more months to get approved. In the meantime, there is a lot of homework to complete.

We recently conducted a study of 60 FiberCo executives and asked them about the biggest challenges in the integration process. Topping the list is coordinating the network infrastructure and service delivery across the combined footprint. The second concern is migrating customers to the new provider's billing, support, and service platforms.

Here are potential steps to better results:

  • Improve the monetization game: For instance, the adage "know your customer" just got a new meaning. Create a unified data estate, understanding the customer, their behavior, needs, patterns, when they are at home. This is key to providing customers a customized offer of ubiquitous connectivity wherever they need it.
  • Offer converged products to meet customers where they are: It is one thing to understand your customer. Its critical, however, to add value to customer experience and, in turn, enable to cross-/up-sell.
  • Simplify processes and operations: Fios and Wireless cannot operate like being provided by 2 different companies. A true convergence will manifest integrated offerings for all customers should be ready before the merger is approved.
  • Target operating model: Build a target operating model, which will be enacted on Day One. Mergers in telco often took too long, and platform consolidations took years. Instead, Telco mergers should be ready to get the best talent, customers, critical assets and just "double its network." For the customers this should be a seamless experience, and operations should get seamlessly assimilated soon after Day 1.

Recent deals are just the tip of the iceberg. There are many more targets in the market and we are still at the beginning of the consolidation wave. There are plenty of decent targets in play in the market and hundreds of smaller fiber companies owned by private equity investors and pension funds which will need to find their exit.

Watch out for our executive briefing to be released in October, and how future buyers, and sellers can maximize their value proposition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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