M&A activity expected to rise in Middle East

Media, technology and telecoms firms to pursue new revenue: analyst.
Value Partners predicts mergers ahead for the region's TMT sector.
Value Partners predicts mergers ahead for the region's TMT sector.

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A rise in merger and acquisitions activity among Technology, Media and Telecoms (TMT) firms is expected in the Middle East during the next three years, according to a report by Value Partners.

Following a lull in activity in 2009, the study predicts a renewed phase of acquisitions to begin operating with clearer objectives and under more prudent terms than previously seen.

The research also states that telcos have not achieved the diversification of revenues that they had been pursuing in the past, with home markets and core activities dominating their balance sheets.

The next wave of activity will look to address this problem by expanding the revenue generating capabilities in other services with a focus on acquiring firms that can boost technology and content capabilities, according to Value Partners.

“The acquisition of media content providers and producers has been limited, understandably, in light of the low uptake of IPTV and mobile TV in the region. This trend may change if regional operators develop a business model capable of achieving the critical mass required for amortising the cost of content production and sports rights,” said Zoran Vasiljev, managing director, Value Partners Dubai.

“We advise that opportunistic investment acquisitions should be developed with a clear timeline for investment, and a clear target price for exiting, with acquisition activity driven by top-level corporate strategy, setting both growth plans and prudent investment principles,” added Vasiljev.”

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