With more services and products turning to mobile options and mobile connectivity becoming the predominant method of consumer online access, it is unsurprising that M&A across the sector has been dynamic throughout 2014 and will likely remain strong throughout 2015. At Acuity, we focus on selling telecoms and wireless businesses (with a great track record in the sector), so this continued development is of high interest to us as an advisory business.
Over the period of mid-2013 to mid-2014, there has been an unprecedented explosion of financial deals in the mobile space. That includes a staggering $47 billion in mergers and acquisitions — plus $14 billion in investments, according to Digi-Capital’s recently-released Mobile Internet Investment Review. According to the report, mobile-focused M&As are up by up to five times from the previous year, which saw only $8.9 billion in deals; and investment is up by around 2.5 times from $5.4 billion. Naturally, the $19 billion WhatsApp deal is an outlier but even without that deal, companies spent $4.1 billion acquiring other messaging apps, and $5 billion acquiring mobile games. Navigation was over a billion, as was photo/video, while finance and advertising were both at $2.3 billion.
Mobile internet has seen more than $14 billion invested in the last 12 months, with financing flows dominated by $3.1 billion in the travel and transport category, followed by almost $1.5 billion each in utilities and mobile commerce. Games saw a billion dollars worth of investment, while the mobile advertising space had an additional $700 million worth of investment.
Major opportunities, with relatively more investment and exit opportunities, include mobile commerce, business apps, education, and wearables. Hidden gems include the advertising/marketing sector, which has seen a massive expansion in the number of start-ups over the past few years, as well as games, navigation, and messaging.
2015 is already looking like a major year for M&A activity in mobile. Rumours had been flying that Hutchison Whampoa is eyeing up O2 UK as the Hong Kong-based company continues to explore ways of boosting its European presence further still. After already snapping up Orange Austria and O2 Ireland, Hutchison is well versed in M&A in the European Union. However, the deal has gone nowhere thus far, but the general atmosphere does signal that large players are actively looking for big deals.
Another acquisition-hungry player is SoftBank Corp., which sold almost $4 billion in bonds to help finance future investment even after the company scrapped a merger of its Sprint Corp. with T-Mobile US Inc. Targets could include an Internet, music or entertainment company that would help bolster Son’s global technology empire and possibly increase Sprint’s appeal to consumers by widening their choice of content to download.
Acuity is attending this year’s MWC and is happy to meet to either discuss this article or any M&A enquiries.
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