APAX Partners

2008 was an active year for the telecom sector. The major players in the market maintained the level of their investments, particularly with the deployment of optical fibre in major metropolitan areas. A number of innovative services – 3G, IP-TV, VoD, etc. – continued to be launched with success. Finally, the consolidation of the sector continued among operators and Internet service providers, reflecting the dynamic performance of the industry as a whole. Despite the turbulence in the financial markets and the background of global recession, the great majority of telecom players are achieving generally positive operating results.

In this context, the investments that we look for fall into two main categories:
First are companies with recurring cash flows that allow for the raising of debt financing through an LBO operation. This concerns certain telecom operators, cable operators and technology companies that have achieved a level of maturity.
The second type of opportunity consists of companies that are currently benefiting from the new dynamic performance of the sector, whose cash flow generation profile permits only a limited level of debt. The companies we look for are businesses, which, as well as having a top-rank management team and a technology that is most often proprietary, have been able to demonstrate their ability to increase sales rapidly and become leading global players.

Overall, we keep a close watch on the restructuring of the sector and the revival of investments in certain specific segments, particularly those related to voice/data/video convergence and the development of new mobile services.

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