Telecommunications : Are We Heading Towards a New Merger Era? (Telecomunicaciones: ante una nueva etapa de fusiones?)
The telecommunications industry is usually among the most concentrated of the economy. Nevertheless, mergers and acquisitions are quite common in the industry since the late 1990's and they seem to pick up after the burst of the telecoms bubble. Will this trend towards concentration last into the future? This paper presents a critical assessment of the probability of increased concentration and identifies those business segments more prone to new mergers. To that end, the paper details the main theoretical motivations behind mergers and acquisitions. This review, together with a comparative analysis of the experiences in Europe and the US, suggests that mergers are a logical consequence of the substantial technological progress and the successive regulatory changes experienced by the sector. The existence of new transactions will thus depend on the direction taken by sectoral regulation and the pace of innovation: Specifically, the regulation of new generation networks and the quality of real-time transmission of digital content are some of the key variables to track in order to assess the probability of new mergers