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Funding, Investment and Deconsolidation of 5G — What to Expect


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Funding, Investment and Deconsolidation of 5G — What to Expect

Baker McKenzie

30th June 2022


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The rollout of 5G continues to gain momentum across the globe, as new opportunities in immersive and connected metaverses arise. Exponential growth in data usage, new technologies, edge computing, higher densification and the availability of affordable handsets are all driving 5G rollout. Telcos are again looking at a range of ways to fund 5G investments and are pursuing M&A strategies and network sharing arrangements to gain market share and access to network equipment, radio frequency spectrum licences, towers and other key elements required for the roll-out of 5G services.

Across Africa, the growth of the digital economy has naturally been accelerated by the pandemic and this unabated demand for technology has caused extensive cross-sector disruption, with the financial, energy, transport, retail, health and agricultural sectors all seeking opportunities to expand their tech infrastructure to acquire the necessary skills and innovation needed to keep up with demand. Fintech is also a popular sector for investment across Africa and specifically in South Africa, Kenya and Nigeria, with health-tech, mobility and agritech also attracting growing interest.


Once the Internet of Things (IoT) becomes a reality, through the rollout of 5G, Africa's transformation will be meaningfully accelerated through the ability to access the enhanced capabilities of smart cities, asset tracking, connected shopping, energy monitoring, smart homes and smart agriculture. It is, however, important to ensure that policy and legislative frameworks are in place to enable the efficient and affordable roll out of telecommunications infrastructure across the continent, as well as access to the required broadband spectrum. A further important focus for the success of 5G roll out in Africa will be the ability of consumers to access affordable data services and smart devices.

Opportunities for consolidation and network sharing 


Although a few jurisdictions’ regulators appear to be more amenable to telco consolidations given the important role played by telcos in the emergent post pandemic global digital economy, most competition regulators (e.g. Australia) remain focused on market concentration issues, which may limit further consolidation.

Foreign Investment Review (FIR)/National security concerns 

There is increasing scrutiny of deals from FIR regulators (e.g. CFIUS, FIRB), security agencies and even direct intervention by governments. Growing focus on national security concerns, geopolitical issues and cyber security risks will increasingly be a gating item in M&A transactions, particularly where assets are considered critical infrastructure in a relevant jurisdiction.

Technology-driven M&A

M&A activity is likely to continue as telcos adapt their core networks in the direction of software-managed relaying and other technology driven services. Telcos with plans to integrate technology capabilities into their 5G roadmaps are likely to target technology companies. Major technology companies will also look to acquire telcos to enable them to leverage the benefits of 5G for the provision of their technology service

Increased investments in adjacent industries 

Telco companies looking to diversify their product portfolios and increase the size of their customer base are behind many of the acquisitions in adjacent sectors such as streaming, IoT, software and applications, advertising platforms, analytics, cyber-security, and health care.

Open technology standards 

Telcos are increasingly partnering with each other to help drive open network technologies. In many instances, these initiatives are supported by government R&D funding, which may result in a reduction in costs and increased innovation by removing barriers to entry for smaller market players.

Infrastructure sales

There is increased M&A activity on sales of telco infrastructure to long term investors — cell towers, terrestrial and subsea fibre, data centres, etc. — to help fund 5G rollouts.

User demand-driven M&A activity

Rising demand for seamless interconnectivity between homes, offices and mobile devices are leading to the need for consolidation of multi-play and converged services, i.e. the ability to access bundled service offerings comprised of content, telecommunications and internet broadband.

Written by Janet MacKenzie, Partner,  Head of the IPTech Practice, Baker McKenzie Johannesburg and Michael Kunstler, Partner, Baker McKenzie Sydney



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