The industry overview
There was a significant amount of M&A activity in the technology, media, and telecommunications (TMT) sector in 2024.
Companies invested $698 billion in just over 1,460 TMT deals, with about 60 percent of those deals (by value)
occurring in North and South America. Large deals—or those greater than $10 billion in value—accounted for about
one-third of all TMT deals. And, amid the challenges of a rapidly evolving geopolitical landscape, domestic deals
accounted for 80 percent of all TMT mergers and acquisitions (by value).
Most of the deals in TMT—75 percent by volume and 59 percent by value—were focused on technology, although the
average size of a technology deal in 2024 ($377 million) was smaller than that of the average media and telecommunications
deals ($626 million and $1 billion, respectively).
Software was the prime focus in most technology deals, and most of the deals above $1 billion in value involved private
equity (PE). By contrast, infrastructure was a key theme for acquisitions in the telecommunications subsector, and
75 percent of the deals above $500 million in the media subsector were focused on visual media and on sports media
rights and gaming.
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Opportunities for 2025—and beyond
Multiple trends, including increased cost pressures, the emergence of new technologies, and a dramatic change in
the regulatory environment for deals, will likely fuel M&A growth across all subsectors in 2025. We also anticipate
an increase in the share of carve-outs as organizations seek to simplify and reshape their corporate portfolios.
PE players’ already strong interest in M&A opportunities is likely to continue—mostly in deals involving technology
and software companies and investments in telecommunications infrastructure, but also in new-media assets emerging
in 2025.
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Subsector activity: Technology
Our research shows that the technology subsector will continue to propel most deals in 2025, by both volume and
value. Specifically, we expect companies and investors to focus on the following:
- Doubling down on market leadership. Acquisitions of $5 billion in value or greater are likely to continue
as companies build out their portfolios and double down on investments in select product categories to ensure
that they are among the top three or four players in those categories. The savviest organizations will also
consider divestments as a means to reshape portfolios and free up funds to pursue additional M&A. - Pursuing capital-expenditure-fueled growth. Capital expenditures are now helping to drive growth across
the technology sector, in a shift away from traditional R&D-driven strategies. This trend is particularly evident
among hyperscalers that are prioritizing increased computing capacity over the launch of new products. In some
cases, technology companies are even investing in power assets to support the expansion of their data centers,
underscoring a move toward deeper vertical integration. Collectively, these developments are expected to continue
to drive M&A activity in 2025. - An inflection point in AI investments. Spending related to AI has been mostly centered on the development
of infrastructure—for example, investments in data centers and the extensive hardware required for AI training
and inference. By contrast, investments in the software that allows organizations to monetize their AI infrastructure
have continued to lag—until now. Companies have reached an inflection point; as organizations reimagine their
AI strategies and shift their spending from pure infrastructure toward software, we anticipate their use of
M&A to acquire essential capabilities. - Acquiring bolt-on capabilities. The acquisition of software products, intellectual property, and other
capabilities—particularly the acquisition of AI expertise, coveted by large platform companies—will continue
to account for a substantial share of M&A activity in the TMT sector in 2025. M&A activity will likely also
rise in IT services as companies seek to acquire the specialized skills and domain expertise that will allow
them to stay competitive and deliver better solutions to clients. Many of these acquisitions may be considered
bolt-on deals, given their size. Still, the potential for growth through these smaller, focused acquisitions
will continue to influence valuations and M&A activity across the subsector. - Rising presence of PE in tech. We expect another year of increased PE investments in the technology sector,
fueled by ample dry powder and a more favorable interest rate environment. Our research suggests PE will stay
active at the top end of M&A in the sector, in line with the 2024 figure, where PE was involved in three of
the top ten deals (by size). PE will also continue to be an important player at the lower end of the deal spectrum,
bolstered by a large backlog of aging PE-owned assets that are poised for exit.
Subsector activity: Media
Several factors will likely continue to drive deal activity in the media subsector in 2025—including increased top-
and bottom-line cost pressures and changes in consumption patterns among customers. Some major deals emerged in
2024, including Skydance Media’s $8 billion acquisition of Paramount Global. Apart from the blockbusters, M&A activity
among smaller media companies points to three emerging trends:
- Separations are the new black. Several media conglomerates, including Axel Springer, Comcast, Schibsted,
and Vivendi, have signaled their intentions to carve out digital assets or legacy media to increase the stand-alone
value of their portfolios or to protect those future-proof assets within declining portfolios. PE may be a potential
outlet for some of the assets being carved out. - Consolidation will accelerate among traditional media. Traditional media is facing significant cost pressures.
Since the first quarter of 2021, for instance, wages in European media have increased 15 percent, the cost of
paper has increased 50 percent, and the cost of energy is up 100 percent. Pair those numbers with the previously
mentioned changes in media consumption patterns and ever-increasing competitive pressures from digital players,
and the result is more consolidation in newspaper publishing and TV broadcasting—and it’s happening quickly. - More companies will pursue creative partnerships. The emergence of streaming content and aggregated digital
services poses a significant challenge for media companies. Some are pursuing creative partnerships to address—and
potentially avoid—issues with fragmentation. RTL Deutschland and Sky Deutschland, for instance, entered a two-year
partnership in which the free-TV player and the pay-TV broadcaster agreed to exchange rights to air various sports
events, including German Bundesliga matches and Formula 1 races. More deals along these lines are likely to emerge
as media companies seek to increase the value of their offerings while avoiding contractual commitments.
Subsector activity: Telecommunications
Changes in the regulatory environment—in Belgium, Italy, Spain, and the United Kingdom, for instance—are putting some
limits on consolidation among traditional telecommunications operators; still, there will likely continue to be some
focus on consolidation along with other critical M&A drivers, including the following:
- Moving closer together. Where there is still space for consolidation, traditional operators will continue
to pursue fixed–mobile and mobile–mobile deals across markets, so they can share the cost of network build-outs
and expand their share of customer wallet. Regulators, for their part, are likely to impose remedies designed
to maintain healthy competition among operators—for instance, pursuing specific commitments related to network
build-outs or seeking divestitures of spectrum or specific assets. - Hunting for new revenue sources. Traditional operators will likely continue to pursue small-scale diversification—in
areas such as security, healthcare, IT consulting, and AI—as they experience decreasing revenues per customer
and search elsewhere for higher returns to supplement their core businesses. - Emphasizing the core. More and more operators are selling off or shutting down noncore assets, or exiting
noncore locations, as they seek to address revenue challenges and simplify their business structures.
In the telecommunications infrastructure subsector, M&A activity has been high—not surprising, given the rising interest
in 5G technology and data centers. In fact, deals involving data centers, fiber networks, and mobile towers account
for most of the deal value in this subsector. PE and sovereign-wealth funds have been important players in these
deals.
In 2025, more consolidation in this subsector is likely as competition increases and infrastructure players struggle
to maintain the large capital outlays they need to grow. Partnerships and PE joint ventures will play a central role
here, too, in providing the up-front investments these capital-intensive businesses need.
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