Ireland M&A insights: Momentum in TMT

Despite the strong macro-economic headwinds, Ireland’s TMT sector has continued to attract significant investment and was the driving force behind Irish M&A activity in the first half of 2020. We explore nine emerging areas which are expected to help TMT remain a prominent feature of the Irish investment and M&A landscape going forwards.

Network sharing

The introduction of 5G is seeing mobile network operators eye new ways of accelerating the deployment of new active and passive equipment to improve network quality. In recent years, in Ireland and more widely across Europe, there has been a marked increase in managed network infrastructure which has seen the corresponding growth of mobile tower companies. It is expected that further mobile network assets will be carved out as mobile network operators focus on their core business. Most recently this was shown by eir’s sale of its portfolio of telecoms masts to Phoenix Tower International whilst Cellnex’s acquisition of Cignal last autumn is illustrative of the wider consolidation at play in the wider towers sector.

E-commerce

COVID-19 has created a permanent shift in Irish consumer behaviour towards online retail. Online retailers have had to work quickly to increase their capacity and infrastructure to meet unprecedented demand and are increasingly turning to data and machine learning to offer targeted products and services to consumers. Coupled with this, there is increasing investment in augmented reality to allow customers to “try” products online before buying. A recent Tech Trends Survey by Equinix revealed that digital transformation was on the agenda for 68% of Irish retail businesses with the improvement of online customer and user experience being the top priority.

Robotics

The impact which COVID-19 and other pandemics can have, is seeing increased investment in the development of hardware and software solutions to manage health & safety. This includes the development and use of autonomous robots for a variety of purposes since, with the use of location and mapping software, they can navigate spaces without human intervention. Akara, an Irish-based robotics firm, has developed a robot that uses short wavelength ultraviolet (UV) germicidal irradiation to greatly reduce the risk of infection in healthcare facilities. There has been a surge in the adoption of cleaning robots in Europe and Asia for use in hospitals, healthcare facilities, airports and warehouses and this trend can be expected to continue.

Payment processing

Seamless and user-friendly transfers and payment processing have seen rapid expansion by user numbers in the last number of years; in just five years, Revolut now boasts over 12 million registered users. Consumer expectation on how they pay for goods and services has heightened as a result. Businesses which have a retail, subscription or service offering will need to meet these expectations if they want remain competitive in the market. Industry players are now partnering, investing in and acquiring other businesses to keep up with this evolving ecosystem. Acquisitions in this space are likely to be a driver of M&A activity in the coming years, with internal digitisation and consumer demand driving value growth, opportunity and consolidation across a number of sectors.

Wireless sensor technologies

Occupancy monitoring presents a new challenge for retail businesses and other spaces where crowd size has not traditionally been tracked. Wireless sensor technologies are now being used to develop automated tracking systems which can monitor occupancy and provide real-time feedback. Whilst the underlying technology is not entirely new, there will be an acceleration in the expansion, development and adoption of such technology in new sectors in the years ahead and Irish developers are pioneering new ways to power such technologies. Whereas most wireless sensors are typically powered by batteries, researchers at the University College Cork are exploring powering such devices with photovoltaic cells made from cadmium telluride (already widely used in solar energy generation) which are more efficient, require less maintenance and are cheaper to manufacture.

Contactless biometrics

It is no surprise that the use of contactless technologies has increased rapidly during 2020 and the global contactless biometrics market is expected to reach $18.6 billion by 2026. The use of contactless biometric solutions is likely to be an area of particular growth with facial and voice recognition having obvious advantages in the age of COVID-19 and beyond. Major financial institutions in Europe and North America are already leveraging contactless biometrics technologies in a variety of scenarios such as ATM cash withdrawals and mobile banking apps.

AI-as-a-Service

A marked increase is expected in AI-as-a-Service (AIaaS) software, being AI software made available off-the-shelf with minimal tailoring required. To a large degree, this interest in AI, and AIaaS in particular, is driven by businesses looking to build models to help accelerate recovery from the current economic slowdown given the inaccuracy and potential irrelevance of historical data and models. Given the increasing focus on supply chain management (SCM), various forms of AI are now being integrated into SCM software to enhance process automation, decision-making, data visibility (static and real-time data) and management information system effectiveness.

Edge computing

As many people in Ireland working remotely and streaming online during lockdown discovered, improvement is needed to the current network infrastructure. Cloud service providers, software providers and network operators are expected to invest heavily in developing edge computing solutions to help address issues caused by the increased transmission and storage of increasingly large volumes of data on limited bandwidth. Verizon and Amazon are already developing edge computing technology for 5G networks whilst in the US there has been extensive investment into processors which are optimised for cloud computing.

Advanced technologies in healthcare

COVID-19 has seen an acceleration in the investment into and development of e-health platforms and record systems, remote monitoring of patients and the use of AI for triage purposes within diagnosis and prognosis. GPs in Ireland are using apps such as Webdoctor for video appointments to minimise patient visits in person. At a basic level, only 3% of health records in Europe are currently available in digital form and the new children’s hospital will be the first acute facility in Ireland to have an electronic record for each patient. Ireland has been at the forefront in the development of the COVID-19 tracker app, an e-health app designed to track and prevent the spread of COVID-19. The unprecedented app, allows the user to track their own health as well as the health of others giving an alert if the user has been in contact with a confirmed COVID-19 case. Given its overwhelming, the Irish company responsible for its development has now rolled out similar versions of the app globally.