Telecoms sector accounts for over 30% of Latin American M&A deals

The telecoms sector accounted for 31.7% of Latin American M&A transactions between the beginning of 2010 and March 2013, according to a report by ratings agency S&P. The total value of telecoms M&A transactions reached around US$123bn in that period, while total M&A activity in the region reached US$377bn. Other significant M&A sectors included consumer goods, raw materials, energy, transport, public services, IT, health and real estate. However, the telecoms sector accounted for by far the largest value in M&A transactions in that time. The second largest industry for M&A activity was the consumer goods sector, where transactions reached US$54.3bn. Continued investment and additional consolidation is likely in the telecoms industry to the extent to which demand keeps increasing and convergence between communication and data services continues, according to S&P. Competition in the telecoms sector has been fierce in recent years, as the main operators have expanded to new markets and offered new services, the agency added. Meanwhile, the recently proposed telecoms reform in Mexicocould result in additional investment and M&A activity in that market. The two largest telecoms M&A transactions to have taken place in Latin America between the beginning of 2010 and March 2013 are América Móvil's (NYSE: AMX) acquisition of fellow Mexican telco Carso Global Telecoms in 2010 for US$35.3bn, and Brazilian operator Oi's (NYSE: OIBR) acquisition of Tele Norte Leste for US$31.5bn, S&P said. The agency also highlighted other significant transactions in Brazil, including the acquisition of Vivo by Spanish telco Telefónica (NYSE: TEF) for US$17bn. Moves like América Móvil increasing its stake in European telcos KPN and Telekom Austria during 2012 could also continue, depending on the extent to which América Móvil and other large telcos continue to seek market diversification, S&P said. Not yet four months into 2013, there has already been significant M&A activity in the region's telecoms sector. Chilean telco Entel has closed a US$400mn-dealto acquire NII Holding's (Nasdaq: NIHD) Peruvian subsidiary Nextel Peru, while América Móvil is set to acquire Mexican entertainment group Corporación Interamericana de Entretenimiento's (CIE) advertising unit, Corporación de Medios Integrales (CMI), for a fee of 1.67bn pesos (US$131mn). Also, Canada's Colombus International has agreed to acquire Kelcom International, the leading cable system operator in Caribbean nations St Lucia, St Vincent and the Grenadines, and Antigua, and Cable & Wireless Communications ( C&WC) is planning to expand its footprintin the Caribbean and Northern Panama through the acquisition of fixed line assets.