M&A remains key to growth for telecom CEOs

By Barbara K. Mednick

Telecom CEOs are optimistic the climate for deals will remain favorable over the next three years.

In fact, the  2018 KPMG Telecom CEO Outlook notes that nearly 75 percent of telecom CEOs have a high to moderate appetite for M&A activity.

In the survey of 82 U.S. telecommunications CEOs, optimism about revenue growth emerged, with expectations that their companies will outpace the broader telecom sector, as well as the U.S. and global economies.

“Although the number of mega-mergers have dominated telecom and media headlines recently, the majority of deals in the short-term are likely to fall within a more moderate range, potentially to fill in innovation or technology gaps,” according to Sean Sullivan, KPMG U.S. National Telecommunications Sector Leader. “For many CEOs, M&A remains a consistent strategy to fostering top-line growth by transforming their business model faster than organic growth and eliminating a direct competitor.”

Top growth strategies

In addition to M&A, telecom CEOs reported that their top growth strategies include strategic alliances and organic growth, followed by outsourcing and joint ventures.

Leading threats to growth

Among telecom CEOs, talent challenges, cybersecurity operational risk, emerging and disruptive technologies, and a return to territorialism were cited as the leading threats to their growth aspirations.

Winning over millennials

Winning over tech-savvy millennial customers is another key challenge. In fact, 44 percent of telecom CEOs indicate their organizations are challenged by how to adapt their sales and distribution models to millennials. In addition:

  • Another 44 percent struggle with how to best engage millennials via digital channels
  • Nearly half of respondents say it is difficult to find senior leaders who can relate to millennials
  • Four in 10 CEOs say their organizations don’t understand how millennials’ needs differ from those of older customers

That’s because millennials are committed to a mobile future where they can watch programs on-demand across multiple devices, giving them what they want when they want it; a choice that differs from Gen-Xers and Boomers, according to KPMG’s Wireless World: Race for the Platform white paper.

“Meeting the needs of this influential generation is clearly an ongoing challenge for the telecom sector. The oldest millennials are in their mid-30s and are expected to comprise the largest and most profitable customer segment for telecom providers for at least the next decade,” said Sullivan. “The companies that do this quickly and effectively will be poised for success among this significant customer base.”

For more information, or to arrange an interview with Sean Sullivan, please contact Barbara K. Mednick.






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Barbara K. Mednick

Barbara K. Mednick

Associate Director, Corporate Communications, KPMG US

+1 612-305-5471