The dynamism of the Technology, Media and Telecoms sector is set to continue.

Challengers can reach scale seemingly overnight, forcing market change at a similar speed. Established business models are upended, driving consolidation and restructuring. Regulators rush to respond, radically reshaping the environment.

These trends show no sign of slowing down.

In recent years, another unquestioned trend in the sector has been globalization. A shift in the balance of power from local to global has been seemingly inevitable – whether in the rise of "Big Tech", the complexity of supply chains or the explosion of global content production budgets.

That inevitability is now in question as regulators and tax authorities seek to claw back ground, trade policies take a protectionist turn and national security and cultural identity emerge as increasingly important political themes.

This year's TMT Horizons reflects the fact that the intersection between the inherent dynamism of the sector and the increasing challenges to unchecked globalization will dominate the next chapter for TMT.

The view from Silicon Valley

By Jane Ross

Increased competition for technology assets from non-traditional buyers, IPO market volatility, and high levels of available cash held by potential buyers mean we expect tech M&A to continue to grow its share of the overall deal market.

The majority of potential acquirers of a tech company are no longer other tech companies. "Old economy" businesses – companies in the industrial, automotive and consumer industries – increasingly look to drive growth and maintain relevance and competitiveness through tech acquisitions. So consumer companies are acquiring e-commerce capabilities and auto manufacturers are acquiring autonomous vehicle technologies.

This doesn't mean the tech industry itself has lost the acquisition habit. As large tech companies mature, they expand into products and services beyond their core business or via vertical acquisitions. So Facebook and Google acquire Oculus and Waymo respectively; and hardware and social media companies are buying software and digital advertising businesses.

Finally, attracted by high growth and increasing numbers of later-stage technology companies, private equity funds have ramped up their tech acquisition strategies. A number have raised technology-focused funds which are among the most active tech acquirers today.

This increasing number of well-funded potential buyers, coupled with the relative uncertainty and cost associated with the public markets, is likely to continue to drive a seller's M&A market characterized by strong valuations and seller-friendly deal terms.

The view from Europe

By Don McGown

Telecoms is likely to see continuing decline in the market share of traditional European operators with their roots in fixed line. However, antitrust concerns continue to hinder consolidation of network operators elsewhere meaning traditional telcos increasingly turn their attention to head on competition with the likes of Sky and Liberty Global in providing content.

Media is transformed by the breakup of the Murdoch Empire, ushering in a new era with Disney and Comcast looking to stamp their mark on the Fox and Sky brands in Europe.

Tech remains a significant disruptor across all business sectors. This is accompanied by a dynamic legal environment as regulators struggle with the challenges of maintaining a workable regulatory framework with an increased emphasis on data and cybersecurity.

With content, advertising, and convenience continuing to be key revenue drivers, we see the likes of Google and Amazon competing not only with even newer entrants, like Netflix, but also traditional content companies, the continuing challenge of tech based models to the traditional major players in the advertising market and an increasingly crowded market for tech driven mobility and delivery solutions.

Looking forward, these trends show little sign of weakening at either a global or a regional level. However, taking a European perspective, linguistic, cultural, and political barriers are sometimes more complex than might at first appear from the outside – meaning that the market is often more fragmented, and complex, than might at first appear.

Click here to read TMT Horizons 2019.

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