‘TMT report 2014: Innovate to survive’, in this report TMT partner Juan Salmerón, shares his views on the sector opportunities and challenges in Spain.

The TMT sector was the scene of some of the biggest M&A deals in the last year and it is attracting many new law firms looking for a piece of the action. Those that survive will be the ones that get to know their clients’ business best.

The technology, media and telecommunications [TMT] sector is evolving at a frantic rate and the landscape is changing dramatically. Some of the biggest mergers to take place in Iberia in the last year have involved TMT companies, with the result that the sector looks markedly different compared to 12 months ago.

Law firms operating in this sector face a number of challenges. First of all, consolidation means fewer companies, which means fewer clients. Secondly, the rapid development of technology means that lawyers face a constant struggle to keep up to date with the latest innovations and their legal implications. In addition, there is also a trend for lawyers to quit private practice and go and work for TMT clients.

There are, however, many opportunities for law firms. TMT clients are increasingly asking their legal advisers to assist them in the development of their products as legal issues are integral to their design, meaning that lawyers who are able to form close partnerships with their clients will foster a sense of loyalty that is perhaps not present in other practice areas. Meanwhile, the rapid changes in the sector present an opportunity for smaller, more flexible, niche firms that are more able than the larger more traditional firms to adapt to fast-changing client demands.

It has been an eventful year in the TMT markets, according to DLA Piper partner Diego Ramos. “There’s been a boom of corporate work around the sector,” he says. Major deals in the last 12 months included Vodafone’s €7.2bn acquisition of Ono and Orange’s €3.4bn acquisition of Jazztel (which is subject to regulatory approval). Ramos adds that, in addition to M&A deals, the last year has also seen the introduction of new IP laws and new TV regulations, some of which have been approved and some of which are expected to be approved before the end of the year. Javier Marzo, partner at Garrigues, adds that there are a large number of players in the sector and that further consolidation in the telecommunications industry, in particular, should be expected.

Three become one

Gómez-Acebo & Pombo partner Almudena Arpón de Mendívil agrees that there is currently a tendency towards consolidation in the sector. “Corporate transactions are reshaping the market. The convergence of the three TMT sectors is confirmed, these moves show the importance of immediate connectivity, speed and content,” she says. Arpón de Mendívil adds that such developments are promoting an increasingly digital environment where new legal issues such as security and privacy have become a priority: “This creates a need for advice on compliance in those areas.”

Osborne Clarke España partner David Miranda says telecommunications companies in Spain are “moving towards a business model more focused on content rather than the traditional infrastructure business model”. He adds:“Entertainment-related services are one of the main drivers for media and telecommunications market operators in their search for a leading market position.” Miranda believes a combination of “telecommunications and media law advice” are the characteristics of a successful TMT law firm at present.

Clifford Chance counsel Carme Briera highlights the acquisition of Cableuropa by Vodafone and the acquisition by Telefónica of a significant stake in the share capital of DTS (the Spanish pay satellite platform) as two of the main developments in the sector over the last 12 months. With regard to the DTS deal, she say that it positions Telefónica as a “major player in the pay-TV sector”.

Another key development, according to Briera, was the introduction of the new General Law on Telecommunications, the main purpose of which was to establish measures to allow the implementation of 2020 Europe’s Digital Agenda, promote investment in the sector, increase competition and remove regulatory barriers for the deployment of electronic communications networks. She adds that the law details the “regulation of operators directly or indirectly controlled by entities of the public sector in order to avoid market distortions affecting competition”.

Cecilia Álvarez, counsel at Uría Menéndez, says many companies that are digitalising their businesses do not have the necessary legal expertise in-house so are reliant on external lawyers. She adds that non-European clients in particular need advice on data protection and IP regulations. Hogan Lovells partner Gonzalo F. Gállego says one of the main challenges in the sector is trying to “match new technologies with new laws – companies don’t always manage that so they need external lawyers”.

Abril Abogados founding partner Ignacio Temiño says TMT is a rapidly changing sector with many spin-off and start-up companies entering all the time. However, Javier Aparicio, partner at Cuatrecasas, Gonçalves Pereira, says that TMT companies with new ideas to develop usually need to go to the US because regulations in Europe make innovation much more difficult.

Ecija partner Juan Salmerón says: ”It is clear the telecoms business is not any more about voice calls. Nowadays revenues come from the quadruple play – the triple play service of broadband Internet access, television and telephone with wireless service provisions – and the other services associated to them where content is king.” He adds that this trend explains why Vodafone purchased ONO, Telefónica´s acquisition of Canal Plus, and Orange´s expected acquisition of Jazztel. Rodrigo Almeida Dias, partner at F. Castelo Branco & Associados, says: “The TMT market is creating a wide range of work for lawyers including M&A and securities, as well as advice on the restructuring of companies – for example HP recently announced that it would be splitting into two companies. However, clients are demanding special fee arrangements for a lot of services.”

Please read full report here: http://www.iberianlawyer.com/index.php/special-reports-practice-areas/tmt-ip-life-sciences/4474-tmt-report-2014-innovate-to-survive