INDUSTRIES SERVED

Media & Telecom

Industry Overview

This industry consists of digital and print media publishers as well as telecommunications companies. The telecom industry can be split into two segments; the wired telecommunications industry which includes telephone operators and manufacturers of wired telecommunications equipment including telephone switching systems, telephones, answering machines, data bridges, routers, modems and gateways. Companies in the wireless segment provide wireless telecommunications services to mobile devices over switching and transmission facilities they own and operate. Key suppliers include CNC machine shops, electronic packaging companies; manufacturers of wires, cables, plastics and semiconductor devices.

Wired telecommunications systems and networking equipment companies are in a state of decline and have been replaced by wireless technology. The wireless communications industry is in its mature stage. In Canada, Bell, Rogers, Telus and Shaw Communications control the wireless telecommunications infrastructure. These operators use a franchise model.

The industry is moderately regulated and is characterized by rapid technological change. Going forward rising use of smart phones and widespread use of internet and social media for communication will continue to drive growth for wireless communication and cellular data services. To help make pricing more competitive, the government has taken measure to encourage new entrants by setting aside spectrums and licenses, however, competing with major players who enjoy pricing power and economies of scale is extremely difficult.

Industry Drivers

Technological innovations

Telecom companies typically offer similar products and cellular plans, and as such, there is very little product differentiation in the market. To differentiate their products, some companies would choose to invest in R&D in new technology and infrastructure. Some examples include 5G network, software development, etc.

Regulations

Companies in this industry provide communication services for virtually all industries, governmental agencies and institutions. As such, they are subject to government regulations and antitrust laws.

Upstream Consolidation

Despite federal governments efforts to block large mergers and boost competitions, ongoing consolidation of telecommunications network owners and operators continues. Experts cite high barriers to entry and largely undifferentiated pricing and service as key causes of consolidation. Telecommunications resellers may have less bargaining power when negotiating network capacity rates as upstream consolidation continues.

Data privacy

Data privacy concerns have regulators and industry leaders looking closely at how telecommunications resellers manage and monetize their customers’ personal data. Data privacy has also become a national and global security concern, as countries around the world engage in cross-border collaboration to provide greater global consistency of privacy and cybersecurity policies, and Research efforts in this area have been on the rise.

Selling a Media & Telecom Company

The media & telecommunications industry sees a large influx of M&A activities. As Canada’s leading private market M&A Advisory firm, Beacon understands that selling a business is an important decision. A dedicated business owner not only seeks to extract maximum value from the sale of a business but also seeks to sell the business to a competent buyer who can continue the company’s legacy. Beacon has worked on valuation and M&A advisory mandates in the entertainment industry, bringing extensive experience in deal negotiation to the table. Our experienced advisory team will assist your business in navigating the entire sell-side M&A process.

As an entrepreneur or business owner who is exploring a potential sale, it is important to understand some key factors specific to the media & telecom sector that might impact the likelihood of a potential sale. These are factors that determine business attractiveness for potential buyers and investors.

Product Quality – To consumers, the products and services offered in this industry are largely similar, and there is a high barrier of entry but relatively low threat from competition and substitutes. Companies must gain a competitive advantage by improving product and service quality.

Stable Revenue Drivers – Media companies primarily make revenue from advertisements and paid subscriptions. Other revenue drivers include internet services, filmed entertainment, and licensing. Successful companies in this industry tend to have stable client and supplier relationships, which lead to stable sources of revenue.

With 40 years of combined experience serving businesses within Toronto, Ontario, and abroad, the Beacon transaction team has extensive knowledge and experience successfully working for several automotive companies from a variety of industries. Whether it be a valuation or sale, our team can provide expertise and resources found only at larger corporations, paired with the personalized touch of our M&A Advisory team. Contact us today to get in touch with one of our advisors.