It's March Madness Time Again ... for the Global Telecommunication Sector

Malcolm White's picture

We’re approaching the end of March, and with that come signs of spring and the hopeful end of a prolonged winter. For sports fans, it is also the start of the NCAA College Basketball tournament, aptly nicknamed “March Madness” due to its frenetic style of play and general unpredictability. It is so unpredictable that Warren Buffett has announced that he is willing to award $1 billion to the person who chooses a perfect NCAA March Madness tournament bracket.  The odds of successfully picking every winner of the 63 games are around 1 in 9.2 quintillion (that would be 18 zeroes), so Warren’s money is very safe.

However, not to be outdone, the global telecommunications sector has spontaneously decided to stage its own version of March Madness with an equally frenetic style and general unpredictability. This is due to ongoing merger and acquisition activity and an unprecedented amount of regulatory uncertainty. This “Big Show” is equally entertaining for those watching. The difference here is that there literally is billions of dollars at stake for each player.

In this blog, we will walk you through each of the “conferences” (or countries)highlighting what we expect to see in this “tournament”.


SoftBank owner, Masayoshi Son, is keen to take his investment in Sprint and use it to further consolidate the U.S. wireless space by purchasing T-Mobile U.S., which is majority-owned by a German telecommunication company, Deutsche Telekom.  If successful, Masayoshi thinks he will have a big enough platform to take on the two dominant forces in the U.S. – Verizon and AT&T. We shall see whether the regulators bend the rules and let him bulk up to take on the competition. Odds are unknown – AT&T was blocked when it tried to go after T-Mobile and a great deal of consolidation in the market has already taken place.


This started off as a mundane situation where Vivendi, owner of the Société Française de Radiotéléphone (SFR), decided to spin this troubled asset out. However, this deal was intercepted by Patrick Drahi, a private entrepreneur and owner of French cable assets, who decided to take a run at SFR himself. But there was confusion on the play. France’s other players, Bouygues Telecom and Iliad, swooped in to try to steal SFR away with a competitive offer. But before the mid-March buzzer, Drahi came back in to score by negotiating an exclusive deal window with Vivendi as the preferred bidder.

We shall see who eventually comes out on top in this game, and whether Drahi is open to concessions to get his target. Vivendi looks like the clear winner either way as SFR has been a drag on good media assets.  


Dutch telecommunication company KPN is waiting to see if the European Union is willing to let it sell German unit E-Plus to Telefonica Deutscheland. KPN is desperate for a winning decision here as it  needs the cash to shore up a stretched balance sheet. 

Other players will be watching the outcome of this game as it could allow much-needed consolidation in Europe. The key event to watch first is whether a pending deal in Ireland gets approval and what conditions are attached by regulators.


There has been a major shakeup in Mexico. The regulators are fed up with the market dominance of Carlos Slim's Telcel, and has created a new regulatory body IFETEL to try and break up these monopolies.  Telcel will have to face new regulations designed to even the playing field based on the rules of the game that were recently announced. 

Television is not immune and dominant player Televisa will have to share the TV airwaves too. The idea is to pit these two giants against each other to compete in the other's square. We shall see how this battle of the titans pans out.  


International player Vodafone just sold off its U.S. joint venture back to its parent Verizon. Vodafone then turned around and used this cash to buy a number of European cable assets, including Kabel Deutscheland and ONO. 

So will the big fish Vodafone get swallowed up by the bigger fish AT&T, who is now talking about being interested in European assets? AT&T recently had to put out a filing in response to press speculation that it wasn’t going to buy Vodafone in the first half of the year. Although the company added some wiggle room by saying there was still interest in Europe. Is Vodafone's buying binge of cable assets an indirect poison pill designed to put off AT&T? This is the market chatter right now – let’s see how this story unfolds as AT&T gets closer to their lockup expiry date.

We can’t forget Canada

There is still a great deal of uncertainty surrounding the market structure within Canada. At the most recent auction, Quebec-based Vidéotron bought additional national licenses. Will it get more aggressive outside of Quebec and become the "fourth operator" the government has been encouraging? What will happen to the other new entrants and will Verizon decide to come back to Canada? There are many moving variables which makes this tough to predict.

So when you are watching the NCAA tournament cheering for the teams you picked in each bracket, just remember that there is another "Big Show" going on within the global telecommunication space.

It may not have exactly the same entertainment value but it sure seems just as dynamic and unpredictable.

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