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| Friday, 11 May 2007 | |
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It seems like the earth is moving again for the world’s largest telcos. It may seem like fun to speculate where and how these massive geological plates of the information age will combine and combust, but it’s a serious business. Next week, our new series takes a peek underneath the crust.
It is a sobering thought. Little more than five years after the telecom operating sector nearly imploded under the immense pressure created by the dot.com bubble, there’s a discernible and sulphuric whiff of the chase in the air. The interregnum of investment anorexia is about to be replaced by a new round of feeding frenzy. The appetite for change, and thus the quasi-industrial logic that is used to justify it, can be summed up in just three words: "because we can".
In truth, the process of consolidation never actually went away, even during the last five years of near-nuclear winter for the telecom sector. A glance at the recent telco M&A history in the United States tells you that. But in that case the coupling partners were effectively huddling together for warmth whilst taking advantage of a deranged regulatory administration which, when faced with a corporate vs. consumer conflict of interests, backed the corporates every time.
In that respect, as in so many others, the US is now morally bankrupt. It is hard to care one way or another.
The US example is instructive. It’s revealing to note that when SBC eventually bought ‘rump’ AT&T and got plenty of change from US$20bn, it bought a brand and little else. Forget the corporate client base and the international footprint; it bought a brand, and a brand steeped in nostalgia at that. Call it ‘striding backwards into the future’. This was on the nausea-inducing end of the well-meaning scale.
It’s a given that when the US sneezes, Europe catches a cold, Asia gets the ‘flu and the third world just continues to die of malnutrition. Nothing new there. The American consolidation has spread its contagion like bird ‘flu on steroids.
But what is new is that, unlike consolidation in the US over the last two years, others around the world are looking at investment and globalisation opportunities from a new and more robust viewpoint.
Commercially, most major telcos cannot be said to be out of the woods yet. But the sap is rising and in spite of often unspecified threats to revenues, the game is on. It’s a game in which the telcos sit pretty but find themseleves far from alone.
Next week’s series looks at various components of this landscape-altering mood in the global telecom sector. On Monday: what happened to competition?
Jim Chalmers
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