IT & Telecom Q1 2020

Industry Trends

Unprecedented Demand for Internet

Telecom providers are experiencing unprecedented demand for internet access as more individuals are asked to stay or work from home due to the coronavirus outbreak. The Federal Communications Commission granted T-Mobile additional access to 600MHz spectrum for 60 days to cope with a surge in demand for internet access. Verizon outlined in its 2020 guidance to lay out an additional $500 million to speed up its transition to 5G to service more demand from customers.^{1 2}

$30 Billion Merger Finalized

After a lengthy process and review, T-Mobile and Sprint have closed their $30 billion merger on April 1, 2020. The new telecom giant is working quickly to develop and deploy its 5G technology seen as critical to the nation’s infrastructure.³

Huawei Technology in US to be Replaced

February 17, the U.S. Senate approved $1 billion for rural telecom carriers to replace Huawei and ZTE Corp. equipment. About 40 rural carriers will receive the funds. The legislation is a result of the U.S. viewing Huawei technology as a national security concern, encouraging other manufacturers to supply 5G hardware for the U.S.’ 5G network roll out.⁴

Cyber Security Remains at Forefront

The pandemic has transitioned massive amounts of employees to work remotely and in many cases on personal devices. This increases the number of access points for cyber criminals to attack a business’s resources. The increased risk of a data breach is expected to increase corporate budgets on cyber security to shore up these weak access points.⁵

National Security Grounds Block Foreign Investment

Trump administration forced Beijing Shiji Information Technology to divest StayNTouch, an American cloud-based hotel management software company, and its customer data within 120 days. The action is backed by a 2018 legislation passed by Congress, the Foreign Investment Risk Review Modernization Act, that allowed government to block transactions on national security grounds.⁶

Largest Transactions Closed

Target
Buyer
Value($mm)

- Zayo Group Holdings, Inc.
- EQT Partners AB; Digital Colony Management, LLC; Devonshire Investors, LLC
- $14,438.24
- Honey Science Corporation
- PayPal Holdings, Inc.
- $4,000.00
- Cision Ltd.
- MJ23 UK Acquisitions Limited
- $2,877.74
- AECOM Management Services, Inc.
- American Securities, LLC; Lindsay Goldberg, LLC
- $2,405.00
- Instructure, Inc.
- Thoma Bravo, LLC
- $2,068.24
- Armis, Inc.
- Insight Venture Management, LLC; CapitalG Management Company, LLC
- $1,100.00
- AVX Corporation
- Kyocera Corporation
- $1,046.11
- Shape Security, Inc.
- F5 Networks, Inc.
- $1,028.00
- Software Solutions Business of Pitney Bowes, Inc.
- Starfish Parent, LP
- $700.00
- Care.com, Inc.
- IAC/Interactive Corp
- $654.78

Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

Fingas, Jon, “FCC Gives T-Mobile Extra Spectrum to Cope with Demand During Coronavirus,” Engadget, Mar. 15, 2020.
Goovaerts, Diana, “Verizon Boosts Network Spend,” Mobile World Live, Mar. 13, 2020.
Lee, Edmund, “T-Mobile Closes Merger With Spring, and A Wireless Giant Is Born,” The New York Times, April 1, 2020.
Ferek, Katy, “Senate Oks $1 Billion for Rural Telecom Carrier to Replace Huawei Gear,” Wall Street Journal, Feb. 27, 2020.
Elbardicy, Mohamad & Emma Bowman, “Cybersecurity Lawyer Who Flagges the WHO Hack Warns of “Massive” Remote Work Risks,” Morning Edition, NPR, March 30, 2020.
Swanson, Ana, “Trump Administration Blocks Chinese Acquisition of Hotel Software Company,” Wall Street Journal, Mar. 6, 2020.

IT & Telecom Q1 2020

M&A Transaction Trends

Industry Trends

Unprecedented Demand for Internet

$30 Billion Merger Finalized

Huawei Technology in US to be Replaced

Cyber Security Remains at Forefront

National Security Grounds Block Foreign Investment

Largest Transactions Closed

Contacts

Michael Poole

Michael Rosendahl

David Jasmund

Eric Zaleski

Melissa Ritter

Michael Rosendahl

Will Stewart

Woody Whitcomb

Michael Poole

Paul Vogt

Mackenzie Moran

Isabel Carta

Philipp Seubert

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IT & Telecom Q1 2020

M&A Transaction Trends

Industry Trends

Unprecedented Demand for Internet

$30 Billion Merger Finalized

Huawei Technology in US to be Replaced

Cyber Security Remains at Forefront

National Security Grounds Block Foreign Investment

Largest Transactions Closed

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