Digitalisation brings more opportunities for Irish telecoms sector

The telecoms sector in Ireland fared relatively well during the pandemic and is set for increasing growth thanks to the digital transformation of many businesses.

The telecommunications sector in Ireland came through pandemic relatively unscathed – certainly compared to most other sectors – during the past 18 months. The large-scale move to homeworking and virtual meetings via platforms such as Zoom and Microsoft Teams accelerated the adoption of faster broadband and related technologies by businesses and individuals alike.

Even with many people preparing to return to the office, warehouse or factory as the pandemic eases, the demand for telecoms solutions is set to remain high as businesses seek to upgrade their technology to ensure they can compete with rivals. Likewise, with hybrid working – spending some time in the office and at home – becoming more popular this year, businesses are looking to set workers up with technology that enables them to be as productive at home as in the office.

Indeed, there is much positivity about the short-term in the sector; between 34-45% of technology, media and telecommunications leaders said they were ‘very confident’ that their organisations would grow during the coming year, according to research by PwC Ireland. [www.pwc.ie/reports/ceo-survey-2021/tech-media-telecommunications.html] This is significantly up on the range from last year, which was between 22-31%. PwC Ireland said this optimism is due to the role the sector has played in helping businesses with digital transformation since the pandemic began.

It is digital transformation that is expected by leaders in the sector to underpin growth over the next three years. And this is not limited to domestic investment – companies across the world are moving towards more digitised operations and the sector in Ireland is well placed to benefit from this as the country is home to many of the world’s and the US’s top software and technology companies. Overall, more than 37,000 people are employed in the sector in Ireland, and it generates exports worth €35 billion per year.

Many business leaders plan to increase their investment in digital transformation over the course of 2021, PwC Ireland added. While many have already invested in the technology and platforms in recent years, they plan to stay at the forefront as they help businesses in other sectors in their own journey towards digitalisation.

Acquisitions

Business leaders have also expressed their confidence in the sector with various acquisitions during the past year. Connectivity specialist Viatel Group, which has offices in Dublin, Dundalk and Limerick, has been particularly active. In December, it acquired corporate connectivity specialist Irish Telecom for an undisclosed amount.

Irish Telecom operates a partnership, Paradyn, which is an end-to-end network service operator with Exigent Networks and Netforce. As part of the deal, Viatel took over Irish Telecom’s connectivity customers.

Earlier in the year, Viatel bought Limercik Ripplecom, which provides telecoms and security services to the B2B and public sector markets. As with the Irish Telecom deal, financial terms were not disclosed.

John McDonnell, managing director of Ripplecom, said: “Joining forces with Viatel means our customers can access a broad new range of cloud solutions and enjoy 100% connectivity coverage across Ireland and beyond.”

Following these acquisitions, Viatel Group now serves almost 4,000 businesses across Ireland and 28,000 residential customers.

Viatel is not the only business to take the plunge and make acquisitions recently. In April, communications specialist Welltel (www.welltelgroup.com) bought the Irish and UK wing of Dublin-based Capstone Intelligent Solutions.

The deal means Welltel can deliver its integrated communications, telephony, cloud and managed services on a larger scale. Capstone will be integrated into the WellTel brand and its 30 employees in Dublin and London will join WellTel’s existing teams in Ireland and the UK to bring its overall headcount to 150.

Then in May, Welltel snapped up secure connectivity and cloud solutions provider Strencom, which is based in Dublin and Cork.

The deal, the financial terms of which were not disclosed, strengthens Welltel’s position in the secure connectivity and cloud solutions market. The addition of Strencom’s secure data connectivity, cloud infrastructure and managed hosting services widens Welltel’s offering.

Following these deals, Welltel is forecasting revenues of €38 million for this year.

Sector investment

There is currently significant investment into the telecom infrastructure in Ireland. Communications provider Eir (www.eir.ie) is in the middle of a €1 billion investment programme to upgrade the nation’s infrastructure. In May, Eir announced that its fibre-to-the-premises network is now available to homes and businesses in 79 towns.

Eir said that since 2019, when it began work on ‘Ireland’s Fibre Network’, the urban rollout has reached some 380,000 premises, which now have internet speeds of up to 1Gbps. Combined with work already completed in rural areas, more than 800,000 premises in Ireland now have access to superfast broadband.

Meanwhile, telecoms companies are investing in infrastructure to provide faster services, at all sizes. For instance, in October 2020 it was revealed that in its first year in Ireland Spanish telecoms firm Cellnex Telecom invested more than €10 million in new infrastructure, which is helping to bring wireless broadband to more than 100 communities across Ireland.

Cellnex entered the Irish market in September 2019 with the acquisition of Cignal for €210 million. By September 2020, the company had built more than 100 new telecom sites in Ireland, the vast majority with fibre infrastructure.

Additional to this, Cellnex has entered a partnership with Coillte. In this partnership, Cellnex will invest €5 million to rollout fire connections on 300 Cellnex sites that are on Coillte property.

Meanwhile, at the smaller – but no less significant – end of the market in February, fibre broadband provider Enet announced that it was investing €1.5 million to expand its network in Dublin.

Following the investment, Limerick-based Enet’s fibre network will span more than 170 kilometres in Dublin, increasing the availability of high-speed and low-cost data connectivity options for telecoms service providers.

The expansion is around Dublin 2, including the Merrion Square and Baggot Street areas, and will allow more businesses to connect to Enet’s telecoms network. More expansions are planned for later this year.

Future prospects for Irish telecoms firms

When Viatel signed off the Ripplecom deal, the former’s managing director, Paul Rellis, said that he could see more consolidation of the telecoms and technology sector happening in Ireland and beyond.

With those on the ground openly talking about such things, as well as the investment in the sector from businesses and others in recent times to build the infrastructure, it seems there will be businesses out there ripe for acquisition, especially some looking to get to the next stage of development. Likewise, those seeking growth may also be looking for external investment to achieve their goals.

Overall, the telecoms sector is set for stable growth in the coming years with many businesses now seeking to digitalise their business following the COVID-19 pandemic. It has been said that the pandemic has speeded up this process by five to 10 years. With digitalisation comes greater use of and need for high-speed and reliable broadband and related services – businesses that haven’t invested in it yet will need to in order to keep up with their rivals.

As mentioned earlier, many of the world’s leading telecoms firms have a base in Ireland, and there are plenty of smaller indigenous businesses providing services too. There is a plentiful base of talented employees out there, either already working in the industry or graduates coming out of universities with tech-focused degrees.