Global M&A Industry Trends in Technology, Media & Telecommunications

Dealmakers are starting 2025 with greater optimism around M&A opportunities in the technology, media and telecommunications (TMT) sectors. TMT is at the heart of the AI boom, which is both paving the way for deals and setting off a capital spending 'super cycle' that is seeing TMT companies invest in energy and real estate. At the same time, headwinds that slowed dealmaking in the past two years—including high inflation, the higher cost of capital, geopolitical tensions and regulatory challenges—have eased, particularly in the US, creating a more favourable dealmaking environment.

Global TMT deal volumes in 2024 were 27% below 2023 levels, but in early 2024 we started to see a recovery in deal values, particularly in the technology sector with several larger deals being announced. We expect this momentum to grow. The new US administration’s focus on deregulation may support more megadeal (deals greater than $5bn) activity in TMT, which, when combined with further interest rate cuts by central banks, could improve executive confidence—a key factor behind M&A. These macro factors—coupled with the proliferation of AI across sectors, the rivalry between new and traditional linear media, and the continued transition and delayering of the telecom industry—may drive an increase in both M&A volumes and values in 2025.

^{Source: PwC’s 28th Annual Global CEO Survey, January 2025}

TMT is seeing fewer deals but higher deal values

Technology continues to represent an outsized portion of the TMT sector, and we expect this will continue in 2025. In 2024, the technology sector accounted for 83% of TMT deal volume and 75% of TMT deal value. While deal volume in the technology sector declined 29% in 2024 compared to the prior year, deal value increased by 33% over the same period, indicating a trend toward larger deals. These increases were mostly driven by the software subsector which accounted for 65% of technology deal value in 2024.

Software deal volume declined by 33%, while deal value increased by 38% from $229bn in 2023 to $316bn in 2024. While fewer deals are occurring, software companies are being acquired at higher valuations compared to last year, reflecting rate reductions, the impact of AI and a recovery in equity markets.

The worldwide surge in interest in AI is leading to a sharp increase in capital expenditures that may affect other capital allocations. However, this shift increases opportunities to capture market share and value through strategic acquisitions lower in the value chain.

Investing in AI

AI is attracting investment from corporates and private capital, particularly in countries where the technology is more advanced. The US, in particular, is attracting significant investment, not just from big tech players domestically but from overseas investors. In January 2025, President Trump announced a $500bn joint venture between OpenAI, Oracle and SoftBank which aims to build a network of data centres to power AI development in the US.

Corporates are choosing to invest in higher growth market segments such as data analytics, automation, language processing, and generative AI, to augment their current product or services and position for growth. Some of the largest deals of 2024 are emblematic of this trend. For instance, Cisco's $28bn acquisition of Splunk and HPE’s $14bn acquisition of Juniper Networks were driven in part by the desire to enhance AI networking capabilities. Similarly, Thomson Reuters’ acquisition of Materia was explained by Thomson Reuters Chief Product Officer David Wong as part of the company’s plan to ‘provide each professional we serve with a Gen AI assistant, transforming work and unifying the entire customer experience’.

The Chinese company DeepSeek has shown that highly capable large language models (LLMs) can be developed with significantly less investment than many had previously thought. Although this could have implications for mid-term capital expenditure on AI infrastructure, it is unlikely to diminish investment in the coming months as AI demand continues to grow. Additionally, there is considerable scope for further innovation in LLMs, and new model architectures may still prove to be resource hungry as researchers continue to push to new frontiers.

Focus on data centres

Substantial capital investments by major tech firms are causing a ripple effect through the value chain, creating vibrant M&A opportunities particularly around data centres and the energy solutions and infrastructure that support them.

Some of the most attractive assets in the AI space are already securing private equity (PE) investment as evidenced by DigitalBridge and Silver Lake’s $9.2bn equity investment in Vantage Data Centers, a global provider of hyperscale data centre campuses, which are considered to be better suited for AI’s increased demands on IT infrastructure. 

According to Gartner, data centre capacity is expected to expand at a five-year CAGR of 28.3%, driven by the proliferation of big data analytics, the internet of things and generative AI. One especially notable example of this is Blackstone’s $16bn acquisition of AirTrunk which completed in December 2024. With this deal, Blackstone intends to capitalise on the estimated $2tn in capital expenditure projected to facilitate new data centre construction globally. 

The build-out of these data centres presents significant challenges in both energy and resource management due to their high energy consumption. This has heightened interest in innovative energy solutions, such as nuclear power, which offers clean, carbon-free energy and high energy density. Recent transactions—such as Google’s deal with Kairos Power for small modular nuclear reactors and Amazon’s $650m acquisition of Talen’s nuclear data centre campus—underscore the strategic emphasis on integrating sustainable energy solutions into data centre operations, which is expected to be a deal driver throughout 2025. The market’s belief in the transformative potential of AI may actually mute some M&A activity in TMT as corporate players with strong balance sheets continue to divert capital to AI-related capital expenditure that may otherwise have been used for dealmaking. Nonetheless, we expect other factors may mitigate the impact on M&A, such as deregulation, which typically is supportive of corporate mergers and acquisitions.

Big tech’s capital investment needs

In 2024, major technology companies like Amazon, Meta and Google significantly ramped up their capital expenditures, driven largely by their focus on AI, as noted above. For example, Microsoft, in its Q3 2024 earnings release, reported a 79% year-over-year increase in capital expenditures to $14bn, primarily for its Azure cloud platform. Similarly, Meta announced in its Q3 2024 earnings release that its capital expenditures grew 36% year over year. Despite these significant investments, supply chain constraints are limiting AI data centre capacity expansion, which leads us to expect a continuation of significant capital investment in 2025.

Elevated spending raises critical questions about the long-term implications for these traditionally high-margin businesses. Software firms now face substantial infrastructure spend to keep up with booming AI demand. As this trend becomes the norm, the traditional business model of high-margin, low-capital intensity software companies may be changing. 

Geopolitical changes may invigorate M&A 

The regulatory environment for M&A in the TMT industry may begin to shift significantly under the new Trump administration in the US. Trump campaigned on policies that could reshape the regulatory environment, and his appointment of new chairs of the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) is expected to result in the introduction of new policies and potentially the reversal of some existing policies of the prior administration. For example, the FCC could ease regulations in the technology sector, and the FTC could take a less aggressive stance on antitrust enforcement. Tariffs and other trade restrictions could also be imposed. While these would be US policy measures, each would likely have global implications on other economies. From an M&A perspective, a deregulated environment is likely to boost M&A, but the complex regulatory landscape in the US and beyond will likely mean the impact on M&A trends will be territory and sector specific.

Interest rate relief

Markets are finally seeing some relief after a prolonged period of high interest rates that significantly increased the cost of capital and dampened M&A. The US Federal Reserve is expected to continue to gradually cut rates in 2025, as are the European Central Bank and the Bank of England. As access to lower-cost capital increases, we expect financial sponsors to account for a greater share of TMT deals, reversing a shift towards corporates which occurred during 2023 and 2024. Some of the largest TMT deals announced in the second half of 2024 show early signs of the resurgence of PE investment such as Blackstone’s aforementioned $16bn acquisition of AirTrunk, Blackstone and Permira’s $13bn proposed acquisition of Adevinta, and Blackstone and Vista’s $8.4bn proposed acquisition of Smartsheet.

TMT is well positioned to gain proportionately more than other sectors from potential rate cuts. The valuations of TMT companies ballooned during the pandemic on expectations of high growth and low interest rates. Now, the strength of the US equity market, as evidenced by the Nasdaq hitting all-time highs buoyed largely by the performance of Mega Cap TMT companies, is an indication of the sector’s rebound. Furthermore, assets that were acquired by PE at high valuations during the pandemic may now realise more palatable exit valuations as rates come down. 

Global TMT deal volumes in 2024 were 27% below 2023 levels, but in early 2024, we started to see a recovery in deal values across all sectors, with several larger deals being announced. TMT had 26 megadeals in 2024, more than double the 11 megadeals announced in 2023. In 2024, the technology sector accounted for 83% and 75% of TMT deal volumes and values, respectively.

On a regional basis, Asia Pacific, EMEA and the Americas all experienced declines in deal volume during 2024, but each maintained an approximate one-third share of the overall TMT global total. TMT deal values in the Americas increased by 46% between 2023 and 2024. Asia Pacific’s TMT deal values increased by 44% over the same period. By contrast, TMT deal values in EMEA declined by 4%.

A shifting market, where regulatory hurdles and high interest rates are diminishing encumbrances to deal-making, record dry powder, and a private equity exit backlog, coupled with significant innovation led by AI, will drive M&A activity in 2025 in TMT.

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