Posted by Mike Cansfield on September 30, 2009
As the global economy shows signs of coming back to life, so Spring seems to have arrived in the communications garden. The first buds of activity in the sector seems to be the proliferation of partnerships. there partnerships are germinating in many forms, and in all regions of the world. Bharti Cellular and MTN are continuing their merger courtship (which if it succeeds will create the second largest mobile company in the world), and AT&T and IBM are (again) jointly working on go-to-market opportunities in the converged ICT (Information and Communications technology) market.
Of course, partnering is not new - we have been here before. As the communications sector recovered from the dotcom crash partnerships were in vogue. They were seen as a way to open up a dialogwith new customer sets - as BT Global Services did with its partners Accenture and CSC on ICT. Opening up new business areas with like-minded partners is as good a way of stimulating new activity as any, and probably more cost effective too. Last year we forecast the return of partnerships at this time in the economic cycle, so for us this is deja vu.
But look closely and things are different this time around - there is a lot more going on. At last we are also seeing consolidation happening. The proposed merger of Orange and T-Mobile in the UK is all about bulking-up in a crowded market, and taking the third and fourth placed mobile operators into a joint leading position. The break up of Nortel is a recognition is (in part) that the NEPs (Network Equipment Providers) need to consolidate too. The theory is the bigger you are the more efficient you will be. This has implications for those who compete with the big boys, as we covered in our recent report "New Business Models Emerge for Telcos".
To return to the the horticultural analogy in this blog post, it as if partnering and consolidation are branches of the same tree and both are now in bud. The former is a looser relationship usually based around go-to-market strategies, and the latter involves a transaction of some type. The fact that financiers are involved is an indication in itself that normality has returned to the economy and the worst of winter is behind us. whether this means Spring in the communications garden really has arrived, only time will tell - but the signs look encouraging.