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News recap: Technology and telecom mergers happening at record rate

In telecom news, technology and telecom mergers are happening at a rapid rate, while WLAN growth is slowing and cloud services are hurting PBX spending.

In this week's news, telecom and technology companies are merging and acquiring other companies at record rates.  After several quarters of significant growth, global wireless local area network (WLAN) growth slowed in the first quarter of 2015.

With the popularity of cloud services on the rise, the global PBX revenue continues to take a hit. And telecom providers in different regions are beginning to spend money at their own pace rather than continuing the relatively synchronized cycles of the past.

Telecom and technology companies merging at record rate

Technology and telecom companies are merging at the fastest rate in more than 10 years, largely due to the continual growth in Internet data usage, according to a Wall Street Journal article citing financial software company Dealogic. Deals totaling $406 billion have been done to buy telecom or technology companies so far in 2015. If the trend continues at this rate, 2015 could have the highest M&A total since 2000, WSJ reported.

Beyond data growth driving the M&A trend, low interest rates are causing companies in many industries to pursue deals to get better returns, the article said.

In April and May alone, three noteworthy deals were announced, including the largest technology deal on record:  Avago Technologies' planned acquisition of Broadcom Corp. for $37 billion, the Wall Street Journal said. Other transactions include Nokia Corp. acquiring Alcatel-Lucent SA for $16.6 billion and Equinix Inc. purchasing UK-based Telecity Group PLC for $3.6 billion. 

The mergers and acquisitions trend doesn't appear to be slowing down any time soon, according to the Journal. In terms of networking equipment, some financial and industry analysts are forecasting that Ericsson is on the lookout for a deal, with Juniper Networks as a potential target.

WLAN growth slowing, report says

Wireless LAN growth slowed in the first quarter of 2015, according to International Data Corporation's Worldwide Quarterly Wireless Local Area Network (WLAN) Tracker report.  The enterprise WLAN segment saw growth of just 3% over the same period last year, its lowest total in several quarters, the report said. According to IDC, this slow growth is due mainly to U.S. education revenues that are likely delayed due to the pending release of E-rate funding for K-12 public schools, and general softness in the public sector and in the Asia/Pacific region during Q1 2015.

The consumer WLAN market saw a 2% decrease year over year in Q1 2015. Each of the previous several quarters has showed modest YOY growth, thanks to the ongoing transition from the older 802.11n wireless standard to the newer and faster 802.11ac

Other enterprise WLAN worldwide statistics in Q1 2015 include 33.7% YOY growth in the Latin American market. Europe, the Middle East and Africa (EMEA), is seeing its fourth straight quarter of significant growth, increasing 11.5% YOY.

Cloud services hurt global PBX spending

As more businesses begin to use cloud services rather than purchase new phone systems, global PBX revenue is seeing a significant decrease, according to a new report from IHS Infonetics. In the first quarter of 2015, global PBX revenue fell 6% from last year, according to its recent Enterprise Unified Communications and Voice Equipment report.  

According to IHS, only IP PBXs had year-over-year growth in Q1 2015, due to strength in the Asia-Pacific market.

"Things have started to slow on the unified communications (UC) front as well, which we attribute to movement to the cloud as businesses look for ease of management and flexibility," Diane Myers, HIS research director for VoIP, UC and IMS said in a statement.

Regional trends highlight telecom provider spending

Worldwide telecom service provider spending increased to $352 billion, up 2.9% year over year in 2014, according to a new IHS Infonetics service provider report. Comparatively, global service provider revenue increased by 0.4 % to $1.997 trillion, the report said.

Stéphane Téral, research director for mobile infrastructure and carrier economics at IHS, said different regions are spending at their own pace, while previously, spending cycles were more synchronized. Téral added that unless a major event occurs, the trend will result in low single-digit spending growth through 2019.

Notable Capex highlights include 3.3% YOY carrier spending growth in Europe, due mainly to Deutsche Telekom and Vodafone capital expenditures, IHS said. Asia-Pacific spending grew 4.2% primarily due to spending in China, with spending declines in Japan and South Korea. 

 

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