Telecommunications Investment Analysis

So, the first 7 months have almost passed in 2010, has the telecommunications sector been changed and do we expect to see more activities in the next 5 months? We have put these questions to a number of telecommunications venture capital & private equity firms; as well as business directors of several Telcos to ask for their opinions.

More M&A deals are expected
As evidenced by deals signed today in Brazil, all are expecting more large size telecommunications deals will be announced next few months; with attentions in South America; and possibly some consolidations in the European telecommunications sectors. There are also signs that there could be a further consolidation in the Internet Service Providers (ISPs) sector in North America, Asia and Australia. In some cases, these are from media companies seeking to expand their presence into the net market; and in other cases; the market is becoming over-crowded; as in the case of Australia. Private equity firms are always keen to provide funding for M&A deals.

More Infrastructure Required
A number of financiers have expressed infrastructure funding continues to be an area in demand; both in emerging and established markets. Some junior telcos have set up new operations in emerging markets to compete with the incumbents; operating using wireless equipment. In established markets; funding for new network & infrastructure upgrades are required driven by consumer demands for faster contents.

Network Security In Demand
Network security technologies & companies are of interest from many venture capital firms; according to our survey. The networks are actually becoming more unsecure in many regions due to lack of security measurements when transition into new hardware or systems. VCs are interested in investing into network security devices, either installed by infrastructure owners; or at consumers’ premises; as well as network monitoring devices; or network management specialists companies.
Internet Data Centers and Colocation Businesses

As my background is from Internet Data Center, I always have a keen interest in this area. It is encouraging to see that Internet Data Centers have survived the financial crisis relatively better than many other real estate assets; mainly because they are used by the mission-critical equipment; and the relocation cost is much higher than an office; and the lease in place is often 20+ years leases for major deals.

Repeated natural disasters across the world; such as earthquakes in Asia, snow storms in USA; and recent heat waves across North America, Asia which have caused severe power outages have added to the business case for Internet Data Center & Business Continuity.

As such, in our survey, this continues to be an area of interest for many venture capital funds.

Applications & Contents

In Japan and rest of Asia, venture capital firms have backed several mobile game developers; as their revenue continue to climb remarkably. Mobile digital marketing agencies are another new breed of advertising agencies that are able to raise capital from investors; mainly to set up their studios and new marketing initiatives. New digital studios have also been established across India, and some VCs believe that Indian software firms will soon able to expand their capability considerably into mobile applications as well; a number of investments have already been made into Indian mobile applications specialists from local, European, Japanese and Singaporean venture capital firms.

We will publish the rest of comments once we finalize our analysis from these surveys.

Looking for investment capital for telecommunications projects or telecommunication technologies, check out our Global Telecommunications Capital Providers Guide on http://researchwhitepaper.com