CSPs Bank on Virtualization in M&A Flurry![]() Virtualized networks are not only reshaping communication service providers' infrastructure, they're also restructuring entire corporations via a flurry of CSP mergers and acquisitions fueled, in large part, by a desire to acquire talent and accelerate internal and customer digital transformations. In fact, 48% of 107 senior leaders from telecommunications companies around the globe say they are actively pursuing a merger or acquisition in the next 12 months, up from 43% six months ago, according to Ernst & Young's 15th biannual Telecommunications Global Capital Confidence Barometer (CCB). And 37% currently have five or more deals in the pipeline, the study says.
The Art of Automation
![]() For some CSPs, their investments in automation are not fully paying off yet.
(Source: EY Telecommunications Global Capital Confidence Barometer CCB) Perhaps, then, it's unsurprising that 49% of deals are valued at $250 million or less, Ernst & Young International finds, and some of these purchases extend into developers of tools for operational savings, network efficiencies and virtualization capabilities. "I'll go back to a conversation I had with a [CSP's] corporate development officer in the Middle East who commented that a year ago, probably 18 months ago now, he was the hero in the company because he had gone to a conference and met with a bunch of content entrepreneurs who were developing new and innovative solutions, and he had brought these people to the company to meet with the CEO and everybody was excited about it; this was sexy, there was a lot of buzz," says Gaeron McClure, EY Global Telecommunications leader at Transaction Advisory Services, in an interview. "But by the time I was meeting with him a year later, he said the hero in the company was the guy in operations who was going to save 5 cents per user on cash operating costs. People have grown, in a very short period of time, very skeptical of transformative transactions," McClure adds. "It's not that they didn't believe there wasn't digital disruption, but because from a governance perspective they weren't convinced of what the appropriate response was."
Telcos got talent This year, 75% of carriers have deployed or stated their intention to deploy software-defined networks, according to IHS Markit, an investment they're making as part of a move to automate and transform networks, operations and internal processes, says Michael Howard, senior research director at the firm. Therefore, in addition to DevOps, virtualization and SDN professionals, service providers also seek -- through mergers, acquisitions and partnerships -- talent who can built on their existing infrastructures and revenue sources while creating new streams of cloud-based services, says EY's McClure. "Their capex investment cycles keep getting shorter and shorter. You've got more and more technology, more and more network investment. A lot of money going into these networks and I think a lot of carriers are very concerned about losing the contact with customers that enables them to monetize that network. They want to make sure they own the customer relationship," he says. "They're not all doing the same thing. There isn't one playbook here. There are about as many different playbooks as there are different companies." — Alison Diana, Editor, The New IP Agency. Follow her on Twitter @alisoncdiana or @The_New_IP. |
Service providers and operators see value -- and revenue -- rise from their growing number of partnerships.
Investments in virtualization empower service providers to turn problematic areas like security and scalability into moneymakers.
By using a platform, AT&T integrates multi-vendor products into one cohesive security solution, says Jason Porter, vice president of security solutions at AT&T.
The NIA's past year included a Live Interoperability Demo at BCE, multiple third-party interop tests and sharing of members' successes with NFV.
Through their investments in virtualization, analytics and performance-monitoring solutions, service providers are better equipped to protect themselves and their customers from costly cyber attacks.
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NFV Orchestration, Infrastructure and VNF
Click to read the Multi-Vendor Interoperability Showcase 2017 CSP Attitudes Toward Digital Transformation: A Reality Check Click to download NFVi - VNF Interoperability Evaluation Status: Updated December 2016 Click to read test results from 2015 Service Chaining Interoperability Evaluation - Live NFV Interoperability Demo Status: Completed in May 2016 Click to read the Live NFV Interop Demo Report To learn how NFVi vendors may participate in the NIA's evaluations, click here. TEST REPORTS
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