Language as a key factor of long-term value creation in mergers and acquisitions in the telecommunications sector

Abstract

This article analysed the long-term value creation or destruction in mergers and acquisitions (M&A) in the telecommunications sector and the role of language in these types of operations. After characterising the telecommunications market and discussing and selecting the most suitable long-term methodology, an econometric analysis of telecommunications M&A from 1995 to 2010 was conducted. The research focused on telephone companies or operators as the leading players in the sector. Based on this econometric analysis, we found clear evidence of value destruction (2000–2010) when the sector is analysed as a whole, and we found evidence of value creation when the companies involved use the same language. Different levels of value creation or value destruction were found, depending on the specific language of the operation. This econometric study is the first study devoted to long-term value creation in telecommunications after the liberalisation of the telecommunications market and the first study to quantitatively analyse the role of language in telecommunications M&A.