TMT sector set for M&A boost with focus on software and AI

In 2024, the sector saw $698b in deal value across more than 1,460 transactions.

Software acquisitions, infrastructure investments, and creative media partnerships are set to drive M&A activity across the technology, media, and telecommunications (TMT) sector in 2025, according to a new McKinsey & Company report.

In 2024, the sector saw $698b in deal value across more than 1,460 transactions, with technology deals making up the majority by both volume and value.

The report noted software remains the most sought-after asset class, especially as companies double down on AI monetisation and shift focus from infrastructure to applications.

Capital expenditure is increasingly fuelling growth, with hyperscalers prioritising investments in data center power and computing capacity over traditional R&D.

These shifts are expected to intensify dealmaking in 2025, with private equity continuing to play a major role across all deal sizes.

In media, consolidation and carve-outs are gaining momentum. Traditional players like Vivendi and Comcast are divesting digital or legacy assets to unlock value or future-proof parts of their portfolios.

At the same time, media firms are forming strategic partnerships to stay competitive amid fragmented content markets. One example is the rights-sharing agreement between RTL Deutschland and Sky Deutschland for major sports events.

Telecommunications operators are also active, focusing on infrastructure assets such as mobile towers, fiber networks, and data centres.

Whilst regulatory constraints in markets like the UK and Italy are slowing large-scale consolidation, smaller, strategic moves are continuing.

Operators are streamlining their portfolios by selling non-core assets, whilst also exploring diversification into IT services, security, and AI. Many infrastructure players are turning to joint ventures and private capital to fund the large outlays needed for growth.

Looking ahead, McKinsey anticipates a rise in carve-outs as companies seek to simplify operations and redirect capital.

With a more favourable interest rate environment and ample dry powder, private equity is expected to maintain strong interest in tech, infrastructure, and emerging media assets.