Telecoms Insights 2009

Welcome to the 2009 edition of Telecoms Insights.

In this edition we explore the impact of the downturn on telecom transactions in 2008, as well as looking at the key trends set to shape the outlook for 2009 and beyond.

Telecom’s reputation as a defensive sector was reaffirmed through most of 2008 as share prices and transaction volumes held up well. That said, telecoms is not completely immune. The year-on year view masks the impact of the sharp decline in conditions since September 2008; after a lag period of just a few weeks, telecom transaction volumes fell to their lowest levels in November and December 2008, and the market for large telecom transactions effectively closed.

Our research suggests that recessions tend to separate out the longer term winners, and we expect that pattern to repeat itself during this recession. That general trend is exacerbated by the 'overhang' of telecom debt due for renewal during the coming years which will likely define much corporate activity in 2009 and beyond. The industry has been fortunate in 2008 in that the total amount of debt falling due was less than in previous years. However the longer-term trend will reassert itself in 2009 as €47bn in senior debt falls due (up €10bn on 2008) and €180bn will fall due over the next four years.