TMT: A Global View of its Elevated Activity

Technology, Media and Telecommunications

TMT or the Technology, Media and Telecommunications is one sector with a high rate of Mergers and Acquisitions. Needless to point out for someone following the sector in the market, TMT companies are currently trading at high valuation multiples, P/E and EV/Sales ratios, in comparison to other sectors. If we talk about the last couple of years, this sector has seen some of the biggest and highest numbers of deals taking place in 2017 and 2018.

The numbers have been staggering with case-in-point being Comcast’s purchase of Sky, a Fox Corporation asset, for $15 billion and Disney buying out Fox for a cash and stock bid of $71.3 billion. So, what is the global overview of the industry? Let the insights take us further. 

2017 and 2018 have been strong for M&As in the global TMT sector; the frenzy was triggered by a rise in the number of international (Chinese) organizations and well-financed private equity houses that were looking out for quality acquisitions to employ their capital in the sector. As per PwC reports, the deals in TMT have accelerated at a good pace. In tech M&A, Q3 2018 witnessed
485 software companies acquisition deals which were valued at $66.4 billion. 

The media and telecom sector M&A also continued to witness strong growth in activity with Q3 2018 witnessing 260 deals valued at $19 billion. Deal volume has grown 34% over Q2 2018, being followed by the Advertising & Marketing and Internet & Information sub-sectors. Here the deal value declined 58% due to the absence of mega deals in Q3 2018 Media and Telecom sector.

The factors influencing this sector to fly high? To name a few, the below listed could be some catalysts:

• Relative rise in demand for cyber security and compliance
• Growing requirement for process automation and cost reduction
• Recent turmoil faced by the financial services sector
• Increased investments in the fiber-roll out
• Millennia stimulated increased data and content exploitation

The increased activity in this sector has resulted in strong returns for shareholders and has pushed up deal values relative to previous quarters. With a lot of dry powder still left with Private Equity and sector companies and TMT still leading other sectors in terms of innovation and growth, we are poised for another breakthrough year in terms of M&A opportunities.