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WIRELESS, CABLE MERGERS ACCOUNTED FOR MOST ACQUISITIONS IN ’95

NEW YORK-The total number and dollar volume of mergers and acquisitions in the global telecommunications market reached an all-time high in 1995, according to a report by Broadview Associates L.P. of Fort Lee, N.J.

Cable and wireless transactions accounted for 69 percent of this activity in the telecommunications market, said the report by Broadview, a leading mergers and acquisition advisory firm to the information industry.

Worldwide, the number of these transactions rose sharply to 495, up from 297 in 1994. Within that global total, the number of North American mergers and acquisitions also nearly doubled, to 324 from 181.

In terms of aggregate dollars, merger and acquisition activity overall climbed 45 percent to $54.7 billion last year, compared with $37.7 billion in 1994. The value of this telecom activity in North America accounted for $31.1 billion of the worldwide total. It rose by 14 percent, or nearly $4 billion, in 1995 compared with 1994.

Although deals under $20 million dominated this merger and acquisition activity, the 10 largest telecom market transactions accounted for slightly more than half of the total dollar value. The largest-valued at $3.3 billion-was the purchase of Lin Broadcasting Corp. by AT&T Corp. Craig McCaw’s $1.1 billion investment in Nextel Communications Inc. ranked sixth. Mobilmedia Corp.’s $945 million purchase of Bellsouth Corp.’s MobileComm ranked eighth.

“There are several drivers to the M & A activity in the wireless sector,” said Holt Thrasher, senior associate, who co-authored the report with Robert McNamara, managing director. “The fact that there were 86 among wireless carriers last year vs. 53 in 1994 is a telling outcome of the economies of scale, especially for contiguous service providers.”

Merger and acquisition activity in the hardware products sector rose along with that in the telecom services sector as carriers focused on ways to increase revenues from their installed capital infrastructure.

Carriers need, but don’t wish to own, the software that maximizes utilization, Thrasher explained.

Among carrier equipment companies in North America, mergers and acquisitions skyrocketed to 24 from three in hardware products, which includes companies involved in wireless network elements. Also within Broadview’s hardware products category are enterprise communications companies, which offer interactive voice and other specialized services. The number of mergers in this segment rose to 60 in 1995, compared with 41 in 1994.

Hardware products likely will see increasing activity this year with the advent of “computer-telephony convergence, which has big implications for wireless communications,” Thrasher said.

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