Technology, media and telecommunications

The Technology, Media and Telecommunications (TMT) sector is a major focus of interest for the private equity industry: in 2007, TMT absorbed €12.8 billion of private equity investment, fully 17% of the total (source: European Venture Capital Association).

Although the sector is diverse and the investment thesis is different for each sub-sector, there are common factors. The communications revolution of the last two decades, over-investment during the ‘dotcom bubble’ and new forms of digital content and distribution are the source of most investment opportunities. As the industry landscape changes, structural inefficiencies arise that are particularly suited to resolution under private ownership.

Broadly, investments have tended to involve business models with predictable long-term cash flows that lend themselves to high levels of leverage (cable, broadcast infrastructure), markets ripe for consolidation and affected by the internet (B2B publishing) and industries that control highly differentiated content with great pricing power (film and TV production).