The importance of cities in location choice : a multiple case study in the telecommunications industry

The importance of cities in location choice

A multiple case study in the telecommunications industry

Master Thesis

MSc. Business Administration – International Management

Supervisor:

Dr Johan Lindeque

Second reader:

Dr Niccolò Pisani

Student:

Sebastian Mats Weesjes

Student ID:

10505512

Date:

29

of June 2015

Word count:

17 951

Statement of Originality

This document is written by Student Sebastian Mats Weesjes who declares to take full

responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources

other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of

completion of the work, not for the content.

Abstract

This research adds to the location choice literature, specifically the national versus

subnational location discussion, by investigating how well city characteristics explain location

choice for multinationals with strong intangible firm specific advantages. By looking at the

location choice of multinationals in the telecommunication sector and linking them to specific

cities (characteristics) the overlooked city level of analysis is investigated. The paper builds

on Rugman & Verbeke’s (2004) argument that Multi National Enterprises (MNEs) have a

more regional strategic orientation (as opposed to a global orientation). The study favours a

location-choice based on subnational analysis; resulting in the influence-annex-importance of

cities (characteristics). Through a multiple case study, this research shows that the reasoning

behind certain investments can be derived from the characteristics of cities.

Acknowledgements

First and foremost I would like to thank my supervisor Dr Johan Lindeque for the constant

support in guiding me through this thesis process. His determination and patience helped me

finalize this document. His enthusiasm and love for the field made me work hard whenever

possible and push me to get the absolute best out.

I would also like to thank my (extended!) family and girlfriend for the help, support and

unconditional love given during this thesis writing process. And last but not least I would like

to thank all my friends for keeping me sane and for showing me that it is possible to write a

thesis.

Table of Contents

3.1 Research design and strategy ... 18

3.2 The Telecommunications Sector ... 20

Case selection ... 21 3.3 Data Collection ... 22 3.4 Data analysis ... 24 4. Within-case Analysis ... 27 4.1 América Móvil ... 27 4.2 AT&T ... 31 4.3 Verizon ... 34 4.4 Deutsche Telekom ... 37 4.5 Telefónica ... 39 4.6 Vodafone ... 42 5. Discussion ... 45 6. Conclusion ... 50

6.1 Limitations and suggestion for future research ... 51

6.2 Scientific relevance and managerial implications... 51

7. References ... 52

Index of Tables

3. Methodology ... 18

Table 1: Company Overview ... 23

Table 2: Overview of investments (deals) made and used ... 24

Table 3: Overview of secondary data collected and used ... 24

Table 4: Codebook ... 25

Table 5: Explaination of city ranking ... 26

4. Within-case Analysis ... 28

Table 6: América Móvil’s investments ... 29

Table 7: AT&T’s investments ... 32

Table 8: Verizon’s investments ... 36

Table 9: Deutsche Telekom’s investments ... 38

Table 10: Telefónica’s investments ... 40

Table 11: Vodafone’s Investments ... 43

5. Discussion ... 45

Table 12: Cross-case analysis ... 47

1. Introduction

It is said that there are only three things that matter in real estate; location, location and location. This does not only apply to the real estate sector; location is also very relevant in International Business. In his work Dunning (1998) names location as one of the three most important aspects in foreign direct investment (FDI). Dunning (2001) addresses location as the locational attractiveness of alternative countries. Also, in other current International Business and International Strategy literature ‘location’ is often treated as synonymous for ‘countries’ (Piscitello, 2011). This could potentially create misunderstandings or missed opportunities when discussing an important aspect of FDI such as location. Beugelsdijk and Mudambi (2013) mention that subnational spatial heterogeneity is often the characteristic that drives firm strategy and therefore it is essential that International Business scholars integrate the knowledge of economic geography, where location is less confined by national borders (Beugelsdijk, McCann, & Mudambi, 2010). Also, McCann and Mudambi (2004) state that there is a need for a greater integration of economic geography in the International Business literature for this reason. In this shift to implementing economic geography, Goerzen, Asmussen and Nielsen (2013) call for a further exploration of the role of cities as locations, which will be the main focus of this thesis.

“In 2008, the world reaches an invisible but momentous milestone: For the first time in history, more than half its human population, 3.3 billion people, will be living in urban areas. By 2030, this is expected to swell to almost 5 billion” (Martine & Marshall, 2007, p. 1). In 2014 the percentage of people living in urban areas has increased to 54% and is believe to rise to 66% by 2050; adding another 2.5 billion residents to our cities (UN, 2014). This shows the importance of looking at cities in (International) Business, as two thirds of future customers and workforce will be located in cities.

In the social sciences the concept of cities has been developed further, Sassen (2005) introduced the concept of the global city. She mentions that because of privatisation there is a change away from interstate connection and that the shift to a focus on cities means a strong emphasis on strategic components of global economy (i.e. emphasis on network economy). Traditional International Business scholars examining location dimensions have had the assumption of the country as the main unit of analysis; this while subnational location heterogeneity is often the attribute that is the force

behind firms’ strategy (Beugelsdijk & Mudambi, 2013). In this vein Goerzen et al. (2013) establish that three city-factors are of importance to firms; global interconnectedness, cosmopolitanism and abundance of advanced producer services. They underwrite McCann & Acs’ (2011) argument that the size of city is less important than its interconnectivity.

Hymer (1972) already argues that when Multinational Enterprises (MNEs) choose a location they pick a place, a city, based on three types of activities. Level III for day-to-day operations, level II for coordination of level III managers and level I for top management. In an extension, this study also creates three tiers of cities, one for each type of activities (Hymer, 1972). This ties in with Dunning’s (1998) location choice theory for MNEs, although he discussed location choice in a more country-specific sense. Dunning (1998) formulated a framework with four kinds of behaviour motivating location choice; natural resource seeking, market seeking, efficiency seeking and strategic-asset seeking. The later three can all be directly applied to cities, as natural resource seeking is mostly affected by country-level (often non-city) endowments. In the case of strategic-asset seeking, or innovation seeking, it is obvious to think of locations as Silicon Valley (computing), London (financial services) or Bangalore (information technology) that are recognised areas for many innovations (Peng, 2012). This type of strategic-asset seeking is of most importance when dealing with knowledge intensive industries (Dunning, 1998).

Mudambi (2008) further mentions that the rising share of intangibles highlights the role of knowledge-intensive & creative industries. The location focal point lead these firms to geographically disperse their value chain, making these industries important to look at for future location choice research. According to Mudambi (2008) what is missing in the International Business literature is the focus on the importance of cities when analysing location in knowledge-intensive industries, which is realized in the economic geography literature, for example by Scott & Stroper (2007).

As shown above, what has been under-addressed in the International Business literature on location choice is the city dimension. “Location behaviour of MNEs is crucial for explaining why cities are knowledge centres” (McCann & Acs, 2011, p.26), it could perhaps also work the other way around: can city characteristics help explain the location choice of MNEs.

This study will look at service sector MNEs with strong intangible Firm Specific Advantages (FSA) from the telecommunication industry, a sector that has been long been thriving on national regulation but from the 90’s took a flight in both technological progress and competition (Gerpott, Rams, & Schindler, 2001). The telecommunication industry is interesting to look at since it has been a sector where countries often established state-owned telecom companies, but now have mostly opened up their markets, allowing (global) mergers and acquisitions (M&A) (Al-Kaabi, Demirbag, & Tatoglu, 2010). Secondly, “due to the nature of mobile technology and its reliance on large infrastructural capital, telecom companies are more susceptible to joint ventures (JVs) and M&As as companies find such ventures easier to partner with other companies than to undertake the huge risky investment of rolling out their own infrastructure from scratch” (Al-Kaabi et al., 2010). Which makes strategic-asset seeking a key issue when choosing a location (Dunning, 1998). Mudambi (2008) and Dunning (1998) both discuss the importance of intangible assets in knowledge-intensive industries; in these industries location seems to play a less significant role. The extent to which that is true in the telecommunication sector, a sector where the swift technological progress has played a key part in the development of economies (Gerpott et al., 2001), leads to the research question of this study:

How well do city characteristics explain the location choice of MNEs with strong intangible FSA’s?

In the next section the conceptual foundation for this thesis will be further developed; the location choice theory and the need for a clearer distinction between national and subnational level. In this the concept of city (as introduced above) will play a significant role. With this foundation, cases from the telecommunication industry will be discussed and analysed, in order to answer the research question.

2. Literature review

This study explores the location choice of MNEs in industries with strong intangible FSAs (specifically in the telecommunication industry), with a focus on the role of cities. Where FSAs are the firm’s specific advantages as conceptualized by Rugman & Verbeke (1992). MNEs’ activities are often taken as a synonym for global business, but the assumption that there is one global market is a myth (Rugman, 2001). Rugman and Verbeke write in their 2004 paper that most multinationals are not doing business in a global setting, but in a regional setting. The main reason for this regionalisation is the liability of foreignness (LoF) (Rugman & Verbeke, 2007), a term that describes the additional costs companies are confronted with when operating in another country (Zaheer, 1995). This regionalisation research (Rugman & Verbeke, 2004) shows a division of the world in regions and that most MNEs are home-regional oriented or bi-regional orientated, mostly active in and between two regions (for example North America and Europe). Rugman and Verbeke (2004) end their argument that (corporate) strategies should be paying more attention to the concept of regionalisation. In this light further investigation should then be given to the sublevels of the current units of analysis, where the locations within a region are more important than the entire region(s) (or countries) themselves; subnational and subregional. A concept that is the execution of gaining location advantages which can tie in with FSAs (Dunning, 1998; Rugman & Verbeke, 1992). The following sections will discuss the importance of location and location choice. The chapter will end with an exploration on the city as a location. Here the role of cities in International Business will be considered (Goerzen et al., 2013; Hymer, 1972; Nachum & Wymbs, 2005) and the selected city characteristics/dimensions will be presented.

2.1 Location

Vernon (1966) argues that a product or service does not necessarily have similar sales results in every country; one location might hold an advantage over another when selling the same product. Location is important and its location advantages make it relative to other locations more attractive for investments (Verbeke, 2009). In the era of globalization, geography (location) is seen to be less important when looking at competition (Porter, 1998), but with the regionalisation theory in the back of our minds we could question if there is really an era of globalisation. Other studies show the

importance of location (Dunning, 1998) and found that country (location) effects can even be as strong as industry effects (Makino, Isobe, & Chan, 2004). Extensive research on location and its advantages especially took-off when Dunning introduced his eclectic paradigm in the 1970’s (Dunning, 2001). This eclectic, or OLI (Ownership, Location and Internalization), paradigm deals with the determinants of foreign direct investment (FDI) and the foreign activities of MNEs (Dunning, 2000) by discussing the ‘who’, ‘where’ and ‘how’. In this, the variable set for location concerns the locational attractions of alternative countries. “This sub-paradigm avers that the more the immobile, natural or created endowments … favour a presence in a foreign, rather than a domestic, location, the more firms will choose to augment or exploit their O [ownership] specific advantages by engaging in FDI” (Dunning, 2000, p.164).

Even though this eclectic theory gained attention, according to Dunning (1998; 2009) location remained a neglected factor. One point he makes both in this article and in his earlier paradigm work is that location advantages are inseparable from ownership advantages, a claim reinforced by Itaki (1991). Not all locations are good for all MNEs, which means the location itself can be considered as a firm specific advantage (Zaheer & Nachum, 2011) in which the firm must create advantage from the location. It is the firm’s ability to build a relationship with a place, its sense of place, which will give the location value for the MNE (Dicken & Malmberg, 2001). Verbeke (2009) classifies this as a location-bound FSA, one that is not necessarily transferable to another location (or company). It is not only about the (intangible) FSAs or the location; it concerns their recombination. Meaning the MNE not only transfers its existing FSAs from another location, but also creates new ones (Verbeke, 2009) by combining the transferred FSAs with country specific advantages (CSA). Motives for relocation and investing in a (new) location will be addressed in the next paragraph.

2.2 Location Choice

As clear from the introduction and the previous paragraph, the role of location was for a long time a neglected factor (Dunning, 1998; Porter, 1994), but was nevertheless not absent from the study of competition (Porter, 1994). “The role of location long followed that of the theory of trade where locational choices and locational effects were only based on an input cost minimization framework”

(Porter, 1994, p.35). Think of land, labour and capital, but later this changed to other motives for choosing locations. As outlined in the introduction of this paper, four motives for location choice can be identified; market seeking, natural resource seeking, efficiency seeking and strategic-asset seeking (Dunning, 2000). The activity concerned with finding or satisfying foreign markets are labelled as market seeking, for example setting up sales offices or acquiring existing companies with a market share in that specific location. When gaining access to natural resources, such as crude oil, unskilled labour or minerals, it is referred to as natural resource seeking. Those activities aimed to designing labour and production more efficiently can be categorized in efficiency seeking (Dunning, 2000). And finally “firms [that] would engage in FDI not only to transfer their resources to a host country, but also to learn, or gain access to, the necessary strategic assets available in the host country” (Makino, Lau, & Yeh, 2002, p. 405), this would be labelled as strategic-asset seeking. Under this gaining institutional knowledge or access can also be labelled strategic-asset seeking.

Over the years strategic-asset seeking has become one of the most important FDI motives (Dunning, 2009). “Such FDI is similar in intent to that of a natural resource-seeking investment in earlier times but, its locational needs are likely to be quite different” (Dunning, 2009). The locational needs are different due to the strategic considerations and the availability of assets (such as technology or labour expertise). These intangible assets benefit from certain locations, such as spatial clusters (Dunning, 2009). Clusters or agglomerations have always thrived because of the learning processes taken place in those locations, some scholars argue that they are “the territorial configuration most likely to enhance learning places” (Malmberg & Maskell, 2002, p. 429). The concept of agglomeration can be explained as the “phenomena that people and economic activity tend to concentrate in cities or industrial core regions” (Malmberg & Maskell, 2002), it becomes even more interesting to look what makes these cities so interesting to locate to, and create clusters.

“It is argued that the existing location approaches within the IB literature as currently specified, are entirely inadequate for analyzing MNE location behavior at the regional level” (McCann & Mudambi, 2004, p.492), these include the transnational regions (as introduced by Rugman & Verbeke, 2005) as well as those at a subnational level. It is therefore needed to address another level of analysis; cities

2.3 Cities

In the development of trade and resource systems, urbanisation was and still is the key of economic growth (Findlay & O'Rourke, 2007; Mitchener & Weidenmier, 2008). As pointed out earlier the world moves to an even more urbanised world, with two thirds of its population in cities by 2050 (UN, 2014). Especially for knowledge-intensive industries this means their core resource, people, are located in cities. As put forward in the introduction of this paper the concept of cities needs to be explored further, especially in International Business (Goerzen et al., 2013). So far the level of analysis within location choice has been global, regional or national. This while cities become more important as a level of analysis; city perspective gives insight to the relevance of MNE location strategy (Nachum & Wymbs, 2005) and can thus be a good indicator for location choice.

In other disciplines, social sciences and geographical economics, the concept of cities has been explored more. The concept of the global city (Sassen, 2005) has gained a lot of attention in social sciences and paved the road for other scholars. Sassen (2005) introduces another formulation of questions of power. According to her work the power lies with the network of the global cities. McCann & Acs (2011) show that the role of MNEs drives the city (regions), which in turn drives the national economies. It is the connection or synergy amongst cities and between city and MNEs that is most important and which creates growth. In order to have a better understanding of how to use cities in location choice, it is important to distinguish the different cities; what types of cities can be classified.

2. Typology of cities

As geography scholars Beaverstock, Smith & Taylor (1999) point out, there has been a range of typologies for categorising cities. “Imperial cities, primate cities, great industrial cities, millionaire cities, world cities, global capitalist cities, international financial centres, megacities and global cities are all well-known designations” (Beaverstock et al., 1999, p.445). The different typologies of cities show the need to study cities; the ranking of cities is not absolute. The type a city can be categorised by changes in industries and the synergy with the MNEs. The centre status in different industries can determine the city’s ‘world cityness’ value, and that can be ranked in alpha, beta and gamma world

cities (Beaverstock et al., 1999). This insight is helpful; the indicators you include in assessing cities will ultimately determine their ranking. This suggests that by focusing solely on a ranking of cities is not always a good way to develop insights on where to locate. An industry specific ranking or investigation would yield more, hence this study is using a specific sector and city characteristics for its analysis.

In the introduction Hymer (1972) was introduced with his typology of the ‘3 Tiers’, based on the decision making of an MNE. For example headquarters would be ideally placed in a capital city with access to the government, media etc. This study will use the typology of Hymer (1972) as its base. In this, the level I cities are those cities that are chosen because of top management decision making, level II cities coordinate the day-to-day activities of level III. Hence cities can be labelled according to the kind of decision-making of most MNEs in that city, and it can also be used to label cities within an MNE in order to establish a hierarchical ranking for further reference. Here extra characteristics can be added on to the tiers in order to get the complete picture for an industry, as will be demonstrated in the next section.

2. Characteristics

Certain characteristics of cities are more important to determine the MNE’s location behaviour. Economic geographers such as Scott (1999) see the effect of the city as being more important than the effect of size and scope of the firm or the nation-state. McCann and Acs (2011) ask whether the scale of a country, a city or firm is most important. They take a historical approach and outline the importance of the city (and its scale) over time. They come to the conclusion, as outlined earlier in the introduction, that the size of a city is less important than its global connectivity. Bigger is not better, so when easy-to-look-at demographics (such as geographical size and populations) become less important it is necessary to look at different characteristics of a city. This does not mean that those ‘easy’ demographics should be neglected, but should be included in the total ‘effect’ of a city on the location choice. McCann and Acs (2011) also found that the size could be a dominant factor in newly industrialising economies.

A ranking of cities cannot merely be determined as a universal list accounting for all situations and companies. In this vein it is important to determine the characteristics of cities depending on the type of MNE or industries. This study aims to establish more insight to the importance of cities in knowledge intensive industries, more specifically the telecommunication industry. Technology developments and the deregulations in the telecommunication industry at the start of this century have brought many changes. “These changes will have profound implications for both infrastructure and service providers, for users, and indeed, for the future direction of the new economy” (Li & Whalley, 2002, p. 452). These changes cause the industry to move from value chains to value networks (Li & Whalley, 2002). This network dimension should thus be kept in mind when looking at the characteristics. Although this is important the main dimension that leads the characteristics in this study is that of location choice.

The market seeking location choice of MNEs is considered with finding a market for products and services. Size of population and wealth here are important characteristics that determine attractiveness of a new market. However, market seeking MNEs do not only depend on this ‘resource’ but also on infrastructure, marketing and information resources for operation and expansion (Luo, 2003). These dependants are not only concerned with market seeking MNEs, but also strategic asset-seeking ones. As established above, the MNEs in the telecommunication industry are (mostly) concerned with these two location choice strategies. It is a knowledge intensive industry, which relies on its intangible FSAs such as strategic alliances and research & development (R&D) (Al-Kaabi et al., 2010). The characteristic of knowledge should thus also be included.

Legislation and more specifically licenses are another important facet of the business of telecommunication firms; with the privatisation of state telecommunication companies at the end of last century there came a lot of regulatory measures (Intven, 2000). The ownership of these licenses and the ability to access them can be considered intangible FSAs and should be represented in the set of characteristics of the city to be located to.

As outlined above, these characteristics can explain the location choice of MNEs with strong intangible FSAs (e.g. telecommunication MNEs), when they are market seeking and/or strategic-asset

seeking. These characteristics are population size, knowledge, legislative influence and global connectivity.

Population size

For many centuries increased wealth has been in correlation with urbanisation (Findlay & O'Rourke, 2007). The more the economy would grow the more urbanisation took place, creating large cities with a relative wealthy population. Creating a potential market for businesses, high city population will also reduce transaction costs. As McCann & Acs (2011) point out, this characteristic is more important for newly industrialising nations/economies. Leading towards the first working proposition:

WP1. Cities with a large population size are interesting for telecommunication companies to locate to

for market seeking.

Urban knowledge Capital

It goes without saying that knowledge is an important dimension to look at in the telecommunication industry, because of the knowledge intensity of the sector. Highly skilled labour is needed for R&D, which makes universities interesting to examine. This will also attract (smaller) companies that could be acquired. Also, a higher employment density in a city will result in more knowledge; “the nation’s densest locations play an important role in creating the flow of ideas that generate innovation and growth” (Carlino, Chatterjee, & Hunt, 2007, p. 389). This, as well as professionals coming from all over the world, creates a new type of capital called urban knowledge capital (Sassen, 2010). Which leads to working proposition two:

WP2. Cities with a higher urban knowledge capital are interesting for telecommunication companies

to locate to for strategic-asset seeking

Legislative influence

In order to gain and maintain licenses it is necessary to stay close to legislative powers (to lobby decision-makers), which is important “in the context of global commercial alliances and increasing international competition” (Bartle, 1999, p. 376). Lobbying or building relationships with the

legislators can be understood as investing into “political capital” (Yoffie & Bergenstein, 1985) and since business operations are influenced by the policies it is important to treat this political capital as an important asset to the firm. Especially for companies in the telecommunication sector, whose deals are often dependent on the legislation being made by the government (e.g. when acquiring national carriers). Leading to the third working proposition:

WP3a. Those cities that house the legislative power of their country/state are interesting for

telecommunication companies to locate to for strategic-asset seeking.

WP3b. Those cities that house the legislative power of their country/state are interesting for

telecommunication companies to locate to for market seeking purposes as they give access to the whole market of the country.

Global connectivity

Global connectivity is mostly concerned with a company’s type I activities (Hymer, 1972). It is also the characteristic that some scholars claim to be more important than size (Goerzen et al., 2013; McCann & Acs, 2011; Sassen, 2005). Others add that global connectivity has become another way to measure how healthy and strong a city and its region is (Taylor & Lang, 2005). It then becomes interesting as an indicator for MNEs when locating, which leads to the fourth working proposition: WP4a. Those cities with a high global connectivity are more interesting for telecommunication

companies to locate to for strategic-asset-seeking

WP4b. Those cities with a high global connectivity are more interesting for telecommunication

companies to locate to for market seeking

2.4 Summary

This chapter started with a short exploration of the existing literature and a recap of the missing elements in the literature. The main point being that within location choice there should be more attention given to cities. Next, the importance of location was discussed and the literature behind location choice followed. With Dunning (2001) and his framework as a starting point, this section concluded with the importance of the various types-of-seeking categories and strategic-asset seeking

being the most important for knowledge-based-intensive industries. Having established the importance of cities and the types of seeking, the last section of this chapter focused on cities and their role in the growth of economies. It also touched upon the typology of cities of which Hymer’s (1972) three tiers typology was at the base. This chapter ended with the characteristics that are most in-line with the location choice motives (market-seeking and strategic-asset seeking); Size, Urban Knowledge Capital, Legislative Influence and Global Connectivity. Based upon these characteristics four working proposition were formulated for further analysis.

3. Methodology

In this chapter the methodology of the study will be outlined. In the first section the research design and strategy will be clarified and justified; through a short general explanation of methodologies the section will arrive at the design used for this study. Then there will be a paragraph on the strategy used for the analysis, this theory in combination with the quality criteria gives a base on which the analysis decisions were made. An investigation of the telecommunication sector and the explanation of the case selection will follow. The chapter will end with a section on the data collection and a section on the data analysis.

3.1 Research design and strategy

The more a study asks a ‘how’ or ‘why’ research question the more likely a case study will be relevant (Yin, 2009). When planning such a study the quality of the design should be tested by the degree of: (1) construct validity (2) internal validity (3) external validity and (4) reliability. These measurements influence the number of cases to be selected; a single case study or a multiple case study. The first one is concerned with only one case where as a multiple case study both investigates within the case situation and across the cases of the same study (Yin, 2014).

The design of this thesis will be a multiple case study in multiple contexts to determine if a generalisation could be made regarding the various contexts within the same industry. This multiple case study will also help answer the ‘how’ and ‘why’ of a research question (Yin, 2009) and since this study is aimed towards how city characteristic can explain location choice, a (multiple) case study would be more applicable. In this, all four types of measurements as outlined by Yin (2014), will be

used to ensure the credibility of the study’s findings. "By combining multiple observers, theories, methods, and empirical materials, researchers can hope to overcome the weakness or intrinsic biases and the problems that come from single-method, single-observer, single-theory studies” (Jakob, 2001)This notion of ‘triangulation’ will be used to not only increase the validation and reliability of the study, but also to enhance the understanding of the study (Yeasmin & Rahman, 2012). This study will mostly concern data triangulation (in the form of using multiple sources) and to some extent method triangulation (specifically the combination of quantitative research and qualitative research). In the following paragraph the strategy behind the analysis will be showcased.

“The analysis of case study evidence is one of the least developed and most difficult aspects of doing case studies” (Yin, 2009, p.127). Yin (2009) speaks of four general strategies when talking about analysis strategies in qualitative research. First there is ‘relying on theoretical propositions’, Yin describes this as the most preferred strategy. Here the propositions will have guided the data collection plan, highlighting the relevant analysis (Yin, 2009). ‘Developing a case description’ is a less preferable strategy and serves more as an alternative when encountering difficulties with the first strategy. In the second strategy the research develops a descriptive framework for the case study.

Using both qualitative and quantitative data is a combination that can be described as a strong

analytical strategy. Since the added quantitative data can cover behaviour that the case study is trying to explain and may be related to an embedded unit of analysis. The fourth strategy that Yin refers to,

examining rival explanations, can be applied to the other three strategies and deals with contradicting

findings. These contradictions, or rivals, could affect the case study analysis.

The strategy for this analysis will be one that combines qualitative and quantitative data, although the quantitative data will be specifically used to select and categorise cases. The working propositions developed through the literature review will make up the driving force for analysing the qualitative data. Given the general strategy, five analytical techniques are relevant (pattern matching, explanation building, time-series analysis, logic models and cross-case syntheses) (Yin, 2009). The pattern matching technique is used to strengthen the internal validity by comparing an empirically based pattern with a predicted one. With explanation building, the goal is to find one explanation for

multiple cases. The time-series analysis technique refers to certain movements in a given time (period). Using these techniques a logical model can be established and applied across cases. In short this study uses a combined strategy of both qualitative and quantitative data for analysis. All five analytical techniques (Yin, 2009) will be applied when called for.

3.2 The Telecommunications Industry

As previously mentioned this study focuses on the telecommunication industry, due to the great interest in strategic-asset seeking in this sector. The shift to intangibles that Dunning (2009) addresses is also present in this industry. In particular, the cases referred to in this study have their core business based on the consumer, making licensing and service (intangibles) of upmost importance. An important note here is that these assets can also be the basis of a market-seeking motive (e.g. in M&As). The telecommunications industry is also interesting to look at because it is a network-based utility that used to be organised as a national monopoly (Bartle, 1999). “With the development of global networks, commercial alliances and high global competition, telecommunications is a paradigm of globalization” (Bartle, 1999, p. 366), linking it directly to the function of (global) cities as nodes in the global network. Telecommunication multinationals now compete on coverage and a variety of features interrelated due to network-effects (Chan-Olmsted & Jamison, 2001).

Liberalisation and privatisation in the telecommunication industry are two significant changes in the past decades. At the end of the last century more then half of the countries in the Americas (70%) and Europe (55%) had privatised their national carries (International Telecommunication Union, 2000). “The Americas (36%) and Europe (39%) have also seen the highest percentages of countries that allow competition in basic telecommunications service” (Chan-Olmsted & Jamison, 2001, p. 9). This liberalisation and privatising also posed new challenges for the MNEs operating in the telecommunication sector. Since many new market opportunities lie in those areas, MNEs have to adapt entry strategies that access local knowledge (Chan-Olmsted & Jamison, 2001).

Policy-makers in Europe and the Americas were (and still are) stimulating this liberalisation and competition. Making sure there is rigid infrastructure and network service requires a strong centralised authority (Lehr & Kiessling, 1998). The effects of these policies are that the investments

have to be approved by the government (and/or EU or federal governments). For the European Union (EU) this means transferring some responsibly from the national regulators to a central regulatory entity and for the United States of America (USA) in a similar fashion, but then from the states to federal level (Lehr & Kiessling, 1998). The call for such an entity resulted in the creation of the EU’s electronic communication regulatory framework (ECRF) in 2003, which forms the basis of national telecommunication laws in its member-states (Nyaga, 2014). In the USA the federal communication commission (FCC) is a central regulatory entity, which is still operating under the Telecommunication act of 1996 (Walden, 2012). This act aimed at opening up the market and introduced competition as well as cross-state regulation, but still left most regulatory power at state-level. Since then no major change in the act has occurred (Walden, 2012). More broadly, the Inter-American Telecommunication Commission (CITEL) has been constructed and entrusted with the coordination of telecommunications within the Americas (Lin, 2002). Furthermore the North American Free Trade Agreement (NAFTA), which has Canada, Mexico and the USA as its members, included a chapter in their agreement on telecommunication; “Chapter 13 of NAFTA is devoted to addressing deregulation, harmonization, market access, tariff reduction, and cross border investment issues in the telecommunications equipment and services sectors among members” (Lin, 2002, p. 40).

Case selection

The method of selecting the six cases for this study follows the approach of Rugman & Verbeke (2004). They determined that the sales of major companies of the Fortune Global 500 (2012) determine their regional orientation and that this is often just a one or two region(s) orientation. Although this work has been criticised, because some scholars argue that sales is not a good indicator (Dunning, Fujita, & Yakova, 2007; Osegowitsch & Sammartino, 2008), it is also considered a relevant study to the field. Dunning et al. (2007) add that the sales of a region in combination with the degree of FDI in a region show the actual orientation. For this study the work of Rugman & Verbeke (2004) has been used as an example to determine the orientation of the Global Fortune 500 companies in the Telecommunication industry. The FDI motives are used in a later stage to pinpoint the city orientation of location choice. Out of the Global Fortune 500 (2012) telecommunication companies three large European and three large North American firms were chosen; Deutsche Telekom, Vodafone and

Telefónica (Europe) and AT&T, Verizon and América Móvil (North America). The main reason for this selection is that there are three firms with their origins in North America and whose home countries are member of the NAFTA and there are three firms whose countries of origin are within the EU. An intriguing element is that all the European firms have a bi-regional orientation and those in America a home-region orientation, with the expectation of América Móvil that has a bi-regional orientation including South America. This allows for some homogeneity between cases and also for some heterogeneity between the groups of cases.

3.3 Data Collection

In order to establish a complete analysis, various types of data were collected. As described above the regional orientation of the companies were determined using the method as set out by Rugman & Verbeke (2005). In 2013 a group of students of the University of Amsterdam looked at company reports of the Fortune Global 500 (2012) MNEs and determined the regional orientation of those firms by looking at number of employees, assets and sales a company had in a certain region. This data was used to select the cases as shown in the previous section.

In order to gather city dimensions, a list of cities had to be created. This was achieved by collecting data on FDI from the Zephyr (2014; 2015) database on mergers & acquisitions (M&A) and joint ventures (JV). Since the Zephyr database only includes FDI deals made between two or multiple companies, non-greenfield investments, company records (including corporate websites) were accessed to check for greenfield investments. Both the completed deals from the Zephyr database and the greenfield investments were gathered over a ten year time period (from January 2004 until January 2014). Ideally each investment will include the date, status, entry mode, country and city. Out of this data a list of cities can be created. Unfortunately this was not possible for all the investments, as they did not all include a city. Also, internal reinvestments (e.g. buying back stock) were excluded in this study since these cannot be considered FDI. The greenfield investments were limited due to the costs associated with them in this industry (Al-Kaabi et al., 2010). No names of cities for these investments were found, leaving them out of the dataset.

Firm and origin Home region Orientation

(Fortune, 2012) Fortune Global 500 (2012) rank First paragraph in ‘about us’ on company website

Deutsche Telekom Bonn, Germany

Europe Bi-regional 82 “Deutsche Telekom is one of the world’s leading integrated

telecommunications companies, with some 151 million mobile customers, 30 million fixed-network lines, and more than 17 million broadband lines.”

Vodafone

Newbury, Berkshire, United Kingdom

Europe Bi-regional 89 “We’ve come a long way since making the first ever mobile call in the UK on 1 January 1985. Today, more than 400 million customers around the world choose us to look after their communications needs. In 30 years, a small mobile operator in Newbury has grown into a global business and one of the most valuable brands in the world. We now operate in around 30 countries and partner with networks in over 50 more.”

Telefónica Madrid, Spain

Europe Bi-regional 105 “Telefónica is one of the largest telecommunications companies in the world in terms of market capitalisation and number of customers. With its best in class mobile, fixed and broadband networks, and innovative portfolio of digital solutions, Telefónica is transforming itself into a ‘Digital Telco’, a company that will be even better placed to meet the needs of its customers and capture new revenue growth.”

AT&T

New York, New York, United States*

North America Home region 32 “AT&T is bringing it all together - helping people mobilize their worlds - with advanced mobile services, next-generation TV and high-speed Internet services, and smart solutions for businesses.”

Verizon

New York, New York, United States **

North America Home region 50 “Every day, we connect millions of people, companies and communities with our powerful network technology. Not many companies get the chance to change the industry and the world through innovation. We do.”

América Móvil

Mexico City, Mexico North America Home region 176 “A good knowledge of the region… A sound capital structure… Efficiency that relies on our vast operational experience… All of these have allowed us to consolidate our position as the leading wireless services provider in Latin America and the third largest in the world in terms of equity subscriber”

Table 1: Company overview (source: author)

* Headquartered now in Dallas, Texas, United States of America ** Incorporated in Delaware, United States of America

The following table shows an overview of the investments (only ‘deals’) made and used for this study. América Móvil AT&T Verizon Deutsche Telekom Telefónica Vodafone

Deals Found 24 21 6 6 64 28

Deals Used 18 16 5 6 19 15

Table 2: Overview of investments (deals) made and used (source: author)

To get a complete view of the chosen cases secondary data was used. Supporting newspaper articles for the deals were searched for in the Financial Times archives. For this the NexisLexis Academic (2014) database was used, a database that features a powerful search engine for the archives of many newspapers. In order to find the articles the time period was set from 1st _{of January 2004 until 1}st

January 2014 and the companies’ names were used as search terms. This resulted in a broad range of articles, which were downloaded and from which specific articles were selected based on their relevance to the investments. To ensure data quality criteria are met (i.e. that there is internal and external validity and data triangulation) also press (/news) releases of the investments were collected. In addition the company websites were browsed (e.g. company history, relevant events) and annual accounts were collected. The following table gives an overview of this secondary data (collected and used).

Company FT Articles Company Records Press/News Releases used

Company Website(s) used Collected Selected Collected Selected

América Móvil 308 17 11 10 0 Yes

AT&T 2396 20 9 9 15 Yes

Verizon 2197 12 11 11 3 Yes

Deutsche Telekom 1654 13 10 10 2 Yes

Telefónica 1583 17 9 9 6 Yes

Vodafone 1675 13 10 10 9 Yes

Table 3: Overview of secondary data collected and used (source: author)

3.4 Data analysis

In this section the segments of the data analysis will be outlined. As previously mentioned the quantitative data was gathered and presented in a Microsoft Excel spread sheet by a group of Master students at the University of Amsterdam in 2013. This data showed the regional orientations of the Fortune 500 companies (2012), based on these orientations companies were chosen. The orientation is used to allow some homogeneity and heterogeneity between cases, as stated above. The qualitative data analysed in this study serve as an explanation of the working proposition.

Analysing qualitative data has certain components: determining themes and subthemes, narrowing them down, ranking those themes and finally applying them to theoretical models (Ryan & Bernard, 2003). Finding the themes and subthemes has been done using a technique called ‘thematic-coding’ (Ryan & Bernard, 2003). The key themes in the literature review were categorised and transferred into codes and sub codes to which working propositions were linked. These codes and sub codes were then used to label argumentation (words, sentences, paragraphs) for the working propositions (see table 4 for the codebook). Systemically categorising the key elements of qualitative data helps with explanatory research (Ryan & Bernard, 2003). The thematic coding was applied to the secondary data, the selected Financial Times publications and company records, using a computer program called Nvivo (QSR International Pty Ltd, 2014). Note that the argumentation found in the deals’ rationale (Zephyr, 2014; 2015), in press releases and those on the company websites were coded by hand.

Theme/code Sub theme/code WP Description

Market seeking

Size 1 Tier I & II Cities with a large population size are interesting for telecom companies to locate to for market seeking.

Legislative influence

3b

Tier I & II Cities that house the legislative power of their country/state are interesting for telecom companies to locate to for market seeking

Connectivity 4b Tier I cities with a high global connectivity are more interesting for telecommunication companies to locate to for market seeking

Strategic-asset seeking

Urban Knowledge Capital

2 All tier cities with a high urban knowledge capital are interesting for telecom companies to locate to for strategic-asset seeking

Legislative influence

3a Tier 1 & II cities that house the legislative power of their country/state are interesting for telecom companies to locate to for strategic-asset seeking

Connectivity 4a Tier I cities with a high global connectivity are more interesting for telecommunication companies to locate to for strategic-asset-seeking

Efficiency seeking & Natural-resource seeking

- Open coding to ensure completeness of analysis

Table 4: Codebook (source author)

As mentioned in the literature review, when looking at the city dimension of a location choice, there is a need for categorising cities. This allows for patterns across similar cities, which is important

when establishing general observations and conclusions (Yin, 2009). There is not (yet) ‘one absolute’ methodology for the categorising of cities. As can be recalled from the literature review, many scholars have their own hierarchy of cities, based on management-level or different flow types for example (Beaverstock et al., 1999; Beaverstock, Smith, Taylor, Walker, & Lorimer, 2000). Hymer’s (1972) classification of three ‘Tiers’ will be the base of this study’s city categorisation. In this, every city where a deal took place will fall into one of these three ‘Tiers’; Tier I, Tier II, or Tier III. The cities classified as Tier I have been studied and accepted by many scholars (Beaverstock et al., 2000; Goerzen et al., 2013), therefore the categorisation of cities made for this study will mostly (only) concern Tier II and Tier III cities. For these categories the different city dimensions; population size, Legislative influence, urban knowledge capital and global connectivity will be gathered from different databases. Each dimension has one variable recorded, except for the global connectivity dimension; three variables will be used to arrive at a conclusion, based on the work of Taylor (2001). Other general variables recorded are capital city, seaport and airport presence. The next table shows an overview of the variables recorded and their influence on the rank of the city.

Dimension Variable Influence on rank Source

Population Size Population size Population > 1 million it is a Tier II city UNdata & U.S. Census Bureau Legislative

Influence

Legislative power in city

If the legislative power is present in the city it is at least a Tier II city

CIA Urban Knowledge

Capital

Top University If there is a top university present it is at least Tier II city

QS University ranking 2012 Global Connectivity Total connectivity

A Tier III city does not have these variable recorded. If a city does have these recorded it is either a Tier II or Tier I Global Network service Connectivities for 315 cities in 2000 by P.J. Taylor. Proportional connectivity Highest proportional connectivity

Standard variables Capital City If a city is the capital it is a Tier II or Tier I

CIA Airport

Presence

Tier II or Tier I cities need to have at least an airport or seaport. Tier III cities need neither, but may have a seaport

IATA Seaport

Presence

IAPH Table 5: Explanation of City ranking (source: author)

The cities were a deal took place were all categorised based on the variables and their influence on rank, as shown in the table. This was not done separate of each other; all variables were taken into

account when assigning a city to a Tier. The variables have been selected based on their dimension (as outlined in the literature review). The population size is a good indicator of the (potential) consumer base present in that city, Tier I cities usually have a large population, followed by Tier II and Tier III cities. For this study the city population was measured using only the city population and not the metropolitan area. This was done because the sources use different criteria in determining a metropolitan area and because some metropolitan areas cover multiple cities, causing potential analytical problems. Legislative power in a city is a good indication as to the influence a city has on the nation, the seat of government will always be located in a Tier I or Tier II city. One of the best ways to measure Urban Knowledge Capital is to look at top universities; much research will be done in these cities and highly knowledgeable spin-offs and start-ups will often locate in the vicinity of the university. This study has chosen the QS University ranking as it also includes many top universities in Latin America as opposed to the Times Higher Education ranking or the Shanghai ranking. Cities with top universities will at least be a Tier II city. The world connectivity variables will measure the degree of (global) connectivity, the higher the degree the more connected the city is in the world city network (Taylor, 2001). Capital presence is a good indicator of institutions and other MNEs present in the city, note that this is also often the case for cities that house the legislative power but are not the capital (e.g. The Hague in The Netherlands). The standard variables airport and seaport presence are good indications for a Tier I and Tier II city, however for the telecommunications industry this is less important, due to the service related nature of the industry.

4. Within-case Analysis

In this chapter the within-case analyses of América Móvil, AT&T & Verizon (North America) and Deutsche Telekom, Telefónica & Vodafone (Europe) will be presented. These firms will be analysed independently of each other. In the discussion chapter that follows, these firms will be compared to one and other, the so-called cross-case analysis, before the conclusions of the study are presented.

4.1 América Móvil

All the investments América Móvil made, during the time studied period, that had a market-seeking motive were done in either tier I or tier II cities. Interesting enough these were all cities that house the

legislative power of the respective countries (and, with exception of The Hague, are also national capitals). There was no evidence found for specific motives to enter a certain city. However, the data points in the direction that the acquired companies all served as a means to reach a new market in a nation or establish a greater market share in the nation of the city. Since telecommunications used to be a sector that was nationally monopolised (Bartle, 1999) it makes sense that current providers are mostly located in the city that seats the nation’s government, making locating to such cities an industry specific strategy (Rugman & Verbeke, 2005). Apart from Santiago, Chile’s capital, América Móvil only invested in one other Tier I city due to Market seeking motives, namely its hometown Mexico City. The interesting aspect here is that all these investments (four in total) served the purpose of consolidating its position as largest telecommunications provider in the Americas, the global connectivity of Mexico City can accommodate this.

The two investments made by América Móvil that had a strategic-asset seeking motive were both acquisitions of companies that were located in Tier I cities, namely Miami, FL, USA and Mexico City, Mexico. Both cities show high urban knowledge capital and are considered connected global cities. The businesses acquired are both service-oriented firms that have intangible FSAs easily transferable to América Móvil. These knowledge exchanges within a city are often associated with global (Tier I) cities (Storper & Venables, 2004) and are one of the reasons behind strategic-asset seeking. Furthermore the global connectivity of these cities enables companies to reach beyond the city and national borders, which in turn becomes a strategic-asset. This is also evident in the acquired firm in Miami, that also operates outside of its region; namely in Latin America. The other two types of FDI motives, efficiency and natural resource seeking, were not present in the deals of América Móvil, this was expected due to the nature of the industry (also see ‘section 2.2 location choice’ of this study).

When looking at América Móvil’s investments through a regional lens, the bi-regional orientation of the firm jumps out. One-third of its investments were made in its home region, while two-thirds took place in South America. All of these market-seeking investments were done in tier II cities (and one in a Tier I city) that house the national government, showing once more the importance

Target companies Year City and Region Tier Motive Evidence

Enitel 2004 Managua, Nicaragua, South America

Tier II Market -"Through this transaction América Móvil gained control of the company and increased its overall ownership interest in it to 99.03%." – Company Website -“This firm is the sole provider of fixed line services in Nicaragua, with nearly 200 thousand fixed lines. It also provides wireless services to approximately 120 thousand subscribers” – Company Website

Comcel 2004 Bogota, Columbia, South America

Tier II Market -Aquisition increased to 96.1% - Deal Type

-“This acquisition will allow América Móvil to complete nationwide coverage in Colombia and consolidate its presence in that country” – Company Website

CTE 2004 San Salvador,

El Salvador South America

Tier II Market -"We continued to acquire minority participations in the company, bringing up our stake to 95.2% at the end of 2004. CTE provides fixed, mobile and other telecommunications services throughout El Salvador." – Company Website

Hutchison 2005 Asuncion, Paruguay, South America

Tier II Market -"To acquire its operator in the Republic of Paraguay. The company offers wireless and value-added services throughout the country" – Company Website

Smartcom 2005 Santiago, Chile,

South America

Tier I Market -"This month América Móvil bought the Chilean operator Smartcom … All three [aquisitions] were new markets for América Móvil" – FT August 14, 2005

TIM Perú 2005 Lima, Peru,

South America

Tier II Market -"América Móvil.. has intensified its battle with Spain's Telefónica in the region by buying TIM Peru … … All three [aquisitions] were new markets for América Móvil"- FT August 14, 2005

Verizon Dominicana 2006 Santo Domingo, Domican Republic, South America

Tier II Market -“An agreement was reached with Verizon Communications to acquire its ownership interests in Verizon Dominicana (100%)” – Company Website -"We are also providing for the control of the three companies by well-regarded, highly qualified operators with significant operations in the region." said Mr Ivan Seidenberg, the CEO of Verizon." - Deal Rationale

America Telecom Telmex Carso Telefonos 2007 2010 2011 2011 Mexico City, Mexico, North America

Tier I Strategic &

Market -"The acquisition, which analysts say will lead to significant synergies, comes as Mr Slim seeks to extend his telecommunications empire throughout the Americas" "At the same time, América Móvil would consolidate its position as the largest telecommunications provider in the Americas" – FT May 10, 2010

TELPRI 2007 San Juan, Puerto Rico South America

Tier II Market -“We completed the acquisition of Telecomunicaciones de Puerto Rico, having purchased 100% of the equity of the company.” = Company Website -"We are also providing for the control of the three companies by well-regarded, highly qualified operators with significant operations in the region." said Mr Ivan Seidenberg, the CEO of Verizon." - Deal Rationale

Table 6: América Móvil’s investments – 1 of 2 (source: Author) Note: all deals made by América Móvil were acquisitions

Target companies Year City and Region Tier Motive Evidence

Oceanic Digital 2007 Kingston, Jamaica, South America

Tier II Market -"This operation will allow Americ Movil SA to expand its presence in the Caribbean." - Deal Rationale

Cablenet 2009 Managua, Nicaragua, South America

Tier I Market -"The initiative is in line with América Móvil's rebranding strategy aimed at establishing the Claro brand in all of its Central American operations" – FT May 21, 2009

Digicel Honduras 2011 Tegucigalpa, Honduras, South America

Tier II Market -"We acquired a 100% ownership interest in Digicel Honduras, a company that provides wireless telecommunications services in Honduras. “ – Company Website

DLA 2012 Miami, FL

USA

North America

Tier I Strategic -"América Móvil expects to expand its streaming services in Latin America [with DLC's assets]" - Deal Rationale

-“We had entered into an agreement with Claxson Interactive Group to acquire 100% of DLA, Inc., which is the leading corporation in the development, integration and delivery of entertainment products made for digital distribution in Latam” – Company Website

CMI 2013 Mexico City,

Mexico North America

Tier I Strategic -"The acquisition is in line with América Móvil's strategy, as CMI has many assets which can be used to advertise products, and América Móvil has a number of products which it is aiming to sell in the market, " - Company Website

KPN 2013 The Hague,

The Netherlands, Europe

Tier II Market -"It will allow us to maintain our leading market positions in The Netherlands and supports the next phase of our Challenger strategy in Germany and Belgium" Deal Rationale

- "It's another sign that diversifying outside of Mexico is of paramount importance for Carlos Slim," – FT

- "Any additional investments have to be made outside of the region [Latin America]." FT

Table 6: América Móvil’s investments – continued 2 of 2 (source author) Note: all deals made by América Móvil were acquisitions

of capitals (and parliament cities) for a telecommunication company when gaining and stabilising its position in a region. South America remains an understudied region in the regionalisation literature and was not included in the original study by Rugman and Verbeke (2004). This might put the regional orientation to a debate, however given the North American privileges of Mexico by being the only Latin American country to participate in the NAFTA it is fair to say América Móvil does indeed have a bi-regional orientation. When investing in its home-region the main motive was strategic-asset seeking, although in its home-region it only invested in firms with strong links to markets in the South American region. This would indicate the fact that Mexico’s history and culture makes it’s inter-regional LoF (between regions) with South America lower than its intra-inter-regional LoF (with-in the region). An interesting phenomenon since normally it is the other way around (Rugman & Verbeke, 2007) and it all depends on which region Mexico is classified in. Interesting to note here is that the KPN deal that took place in The Hague, NL (in a region with a high inter-regional LoF), eventually was nullified by the Dutch foundation linked to KPN (Thomas, Sakoui, & Webber, 2013).

4.2 AT&T

AT&T’s market seeking motives often ended up with acquiring companies that were located in cities that are the state capital and house the seat of the state government. It located to four of these capital cities, three Tier II cities and one Tier I city. The only Tier I city AT&T located to for market-seeking motives was Atlanta (GA, USA). What may have influenced the deal is the high degree of connectivity of Atlanta; since this deal was also a means to lead the way in integrated wireless services nationwide. The three other deals involving Tier II cities with a state capital, all have as rationale to reach a greater market than the city itself. It seems that not the legislative nature of these state capitals, but the domestic (and state) connectivity played a role. In this the Tier II cities were chosen as gateway to a greater area. This was also the case for the other four Tier II cities that were invested in for market-seeking purposes. However, in these investments the city does not seem to play an important role, but rather the companies’ assets were the main reason for acquisition. In these deals AT&T would have acquired the companies regardless of which city type. This is also the case with the only deal made in a Tier III city; Fairfield, California. In this deal it acquired a company because of its wireless network in West Virginia, located 4187 km east of Fairfield, CA.

Target companies Year City in USA Tier Motive Evidence

Callisma Inc. 2004 Palo Alto, CA. II Strategic - "Callisma has high skills consultants" - Deal Rationale

- “A move designed to enhance its ability to deliver managed communications offerings and

professional network consulting services to enterprise business customers" – News Release January 6, 2004

AT&T corporation

2005 Bedminster, NJ.

II Market - "In 2005, SBC, as AT&T Inc. was then called, bought AT&T Corp. for Dollars 16bn, subsequently adopting the most famous name [and network] in the US telecoms industry" - FT June 19, 2007 - "Through its subsidiaries and affiliates, AT&T Inc. is the largest telecommunications company in the United States" – News Release November 18, 2005

Bellsouth

corporation 2006 Atlanta, GA. I Market - "The purchase of BellSouth gave AT&T exclusive control of Cingular, the largest US mobile operator by number of customers." - FT June 19, 2007 - "In the Southeast, we will build on BellSouth's excellent record of serving customers and

communities. And we are ready to lead the way in a new era of integrated wireless services nationwide." - News Release December 29, 2006

Wayport Inc. 2007 Austin, TX II Market - "The deal expands the AT&T's WiFi footprint to nearly 20,000 hotspots in the US and more than 80,000 locations worldwide and is designed to enable the company to better serve the growing number of subscribers and others carrying WiFi-enabled devices including smartphones" – FT November 7, 2008

- "Wi-Fi as strategic choice to become WI-Fi leader" - Deal Rationale

- "The Wayport resources significantly advance AT&T's strategy for deploying consumer Wi-Fi services" – News Release November 6, 2008

Dobson

communications corporation

2007 Oklahoma

City, OK II Market - "Dobson's purchase will give AT&T direct access to an additional 1.7m subscribers in rural areas' - FT June 30, 2007 - "Offering our customers in markets large and small the best and broadest wireless network" - Deal Rationale

- "The merger extends AT&T's coverage and services into a number of primarily rural and suburban areas" – News Release November 15, 2007

Ingenio Inc. 2007 San Francisco, CA

I Strategic - “Ingenio’s technology will allow AT&T to expand our robust service portfolio for print, online and mobile advertisers, and that will further differentiate us from our competitors.” – News Release November 19, 2007

Interwise Inc. 2008 Cambridge,

MA II Strategic -"The transaction strategically aligns Interwise's innovative IP-based conferencing and collaboration solution with AT&T's enterprise networking, communications and collaboration service." – News Release October 1, 2007

Table 7: AT&T’s investments – 1 of 2 (source: author) Note: all deals made by AT&T were acquisitions