Telecoms operators have spent the better part of a decade promising agile transformation, only to see many of those programmes stall under the weight of legacy systems, rigid processes and mounting tech debt, writes Anna Ribeiro.
Confronted with sluggish internal progress and escalating enterprise demand for cloud-managed, software-defined offerings, carriers are increasingly choosing the quickest path: snapping up start-ups born and raised in the cloud, operating agile development practices.
Mature businesses are also being acquired. Early this year, Swisscom completed the purchase of Vodafone Italia for €8 billion or so, adding Vodafone’s mobile clout to Fastweb’s fixed broadband footprint to turbocharge its convergence play in that country.
Around the same time, Nokia closed its purchase of Infinera, an optical networking vendor, for US$2.3 billion, a deal that further expanded its data centre and cloud infrastructure products in one swoop. These types of deals indicate that operators are not waiting for their in-house agile transformations to yield results. Instead, they are focused on the overnight import of cloud-native, multi-cloud, and hyperscale-ready capabilities.
But the larger question remains whether acquisitions in aggregate provide a viable path to reinvention or are simply a very expensive way to buy time.
How is all this changing?
Operators are buying cloud-native startups to short-circuit slow internal change. It is a real pattern, not a one-off, reflecting a decade of faltering modernisation programmes. Accenture’s 2024 research found the average operator’s tech debt sits at 56% and fewer than 7% of executives were satisfied with returns on recent IT modernisation, a blunt signal that many agile transformations are stuck in neutral mode.
Telcos have also targeted core network software. Metaswitch was acquired by Alianza in March this year, taking over from Microsoft. The move positions Alianza to fortify its offering in cloud-native core network functionality and VoIP software solutions. In a targeted move to bolster cloud-native core offerings, Lumine Group acquired in April 2024 Axyom’s 5G core and RAN assets from Casa Systems. The deal brought in existing virtualised EPC and RAN technologies, accelerating Lumine’s expansion in next-gen core networking solutions.
Why are operators choosing the M&A route now?
First, the buyer economics are persuasive when weighed against the time and complexity of unpicking legacy stacks. Accenture reports that most CSPs aspire to cloud-first operations, yet only 26% follow advanced practices today, a gap that M&A (mergers and acquisitions) can compress by importing mature teams, tooling and playbooks.
Second, enterprise demand has moved decisively towards cloud-managed connectivity and security. IDC’s worldwide SD-WAN survey showed 40% of respondents already using SD-WAN and another large cohort planning adoption, with a strong preference for cloud-managed models and growing SASE uptake. That demand profile rewards operators that can deliver software-defined services quickly, even if capabilities come from acquired specialists.
There is also a strategic network angle. Analysts tracking open, cloud-native networks have documented a conviction-to-execution gap across the industry, with most operators endorsing open architectures but far fewer having a mature strategy to implement them. Buying cloud-native firms that already ship microservices, CI/CD pipelines and API-first products is a practical way to narrow that gap.
Does this approach work for the long haul, or is it just kicking the can ahead?
The answer depends on integration discipline and whether the operator uses the acquired company as a catalyst for broader change, not as a veneer.
On the plus side, M&A can deliver real speed. During the first quarter of this year, Motorola Solutions acquired RapidDeploy, a provider of cloud native 911 solutions; Theatro Labs, which develops AI and voice-driven frontline workflows; and InVisit, a company offering cloud-based visitor management systems. By embedding these software offerings, Motorola accelerated its move from hardware-centric solutions toward agile, software-driven services at the enterprise edge.
Millicom signed agreements to acquire Telefónica’s operations in Uruguay and Ecuador, totalling around US$820 million. These deals rapidly expand spectrum, customer base and digital service reach across the region while anticipating immediate scale benefits, enhanced synergies and long-term value creation across its Latin American platform.
The risks are predictable. If the acquired start-up is parked in a silo with separate tooling, procurement and compliance gates, its velocity decays to the incumbent’s pace. If the operator does not retire legacy systems, tech debt continues to tax change initiatives, eroding deal value. Accenture’s data is a warning here: without a programme to reduce tech debt and rebuild a digital core, bolt-ons will underperform.
Talent flight is another red flag. Retention packages lapse, founders leave and the cultural backslide begins. Finally, customers will judge outcomes, not headlines. IDC notes that buyers want simplified management and measurable savings from SD-WAN and SASE. If acquired capabilities do not translate into cleaner portals, faster provisioning and tighter SLAs, enterprises will keep shifting spend to software vendors and hyperscalers.
What separates durable strategy from can-kicking?
For telcos, the real test is whether these acquisitions become a springboard for deeper transformation or remain a temporary stopgap. The difference between lasting change and short-term patchwork lies in how effectively the acquired capabilities are integrated into the core business.
- Make the acquired stack the default. Mandate common CI/CD, observability and API standards across legacy and acquired teams within twelve months. Tie funding to platform adoption rather than project-by-project exceptions.
- Convert acquisitions into platform services. Productise identity, billing, provisioning and analytics so that new offers ship as reusable services, not one-offs.
- Pair M&A with decommission. Set explicit targets to switch off overlapping legacy systems. Savings fund further simplification.
- Protect and scale the culture. Keep the startup’s product operating model, not just its logo. Measure leaders on release frequency, customer NPS and attach rates for cloud-managed features.
Looking ahead, the real test will be whether these acquisitions become catalysts for genuine reinvention or fade into short-lived boosts in market share. If Swisscom succeeds in weaving Vodafone Italia’s assets into a fully converged digital operator, it could set the pace for European telcos pursuing scale through convergence.
Vocus has the chance to utilise TPG’s fibre to fast-track private network and enterprise edge services, while Millicom’s Latin American expansion could enable it to bundle mobile, broadband and cloud security in markets where demand for digital services is accelerating.
However, if operators fail to execute, these deals may stand as little more than costly exercises in buying time.
Anna Ribeiro