This week, I had my first invitation to something called the Telecomunications Executive Network which describes itself as “set up to bring together influential players within the telecommunications industry and its periphery to exchange ideas and discuss new business strategies”. Certainly this London event was both very interesting and high powered.

The subject of the panel session was “”Consolidating & Converging: What’s The Post-Big-Deal Telecoms Market Going To Look Like?” The panel members were Charles Harman of JP Morgan Cazenove, Duncan Lewis of The Carlyle Group, Sean Stephenson of Pipex, and Shai Weiss of ntl.

From a merger & acquisition point of view, four trends were identified:

1. There is a return of the last land grab syndrome with companies buying up other players before someone else does, for instance Telefonica’s acquisition of O2.
2. Private equity funds are having an enormous impact funding large deals while the sector is deeply under leveraged.
3. We are seeing the end of the idea that fixed and mobile operations should be split up as BT did with O2.
4. Convergence is now really happening and the acquisition of Easynet by Sky dramatically underlines this.

The event should have been good news for the BT executives present. It was said that the City believes that Ofcom is doing a better regulatory job than Oftel and that the establishment by BT of the new Openreach division is a very welcome development. It was suggested that Openreach will have more profound implications than is widely appreciated, enabling altnets to become asset-light. When asked how the panel members would invest �1M if it could only go in one company, two panel members nominated their own company, but the other two plumped for BT (although one broke the rules and said that half of the money should go into companies providing managed services for SMEs).

Looking to the future of the industry, it was opined that:

• In recent years, it has been a tough industry in which to make money, but it should be easier to make money in the next few years.
• Scale players will merge but there will still be huge fragmentation in both infrastructure and services.
• The big players in the UK will be BT, Orange, Sky and ntl with AOL and Carphone Warehouse in contention.
• The potential impact of Microsoft could be dramatic.