The FOCUS Telecom Business Services Index (TBSI) fell 29.1% in the past three months, more than erasing its 28.2% gain from our summer reporting period. This also ended a run of two straight periods in which the TBSI outperformed the broader indices, as the S&P 500 and the NASDAQ posted modest gains of 2.0% and 2.5%, respectively. The sharp decline pulled the TBSI’s full year return into negative territory. The TBSI is down 1.6% over the 12-month period, as compared to gains in the S&P 500 and NASDAQ of 14.4% and 18.5%, respectively. Sector multiples also declined over the past year. The revenue multiple for the TBSI decreased from 1.1x a year ago to 1.0x at the end of the current reporting period, while the EBITDA multiple dropped even more sharply from 11.1x to 9.4x over the same time frame. Both multiples are also well below the 1.4x revenue and 13.4x EBITDA multiples at the end of our summer reporting period.
The Engineering and Construction sub sector was the main driver of the TBSI’s decline with a three-month loss of 42.8%.This represents a sharp reversal from its 31.0% gain last period. MasTec and Dycom, which led the sub sector’s gains in our summer report, were the biggest decliners with losses of 48.7% and 46.8%, respectively, while Baran Group fell 31.5%. COMSYS Holdings bucked the trend with a 3.8% gain. After more than doubling over the 12-month period in our summer report, the sub sector is now up just 2.4% for the full year period. COMSYS Holdings (up 39.6%) was the best performer over the past year, while Dycom (down 7.8%) was the only company with a full year loss. Sub sector multiples closed out the period at 1.2x revenue and 8.7x EBITDA, compared to year-ago multiples of 1.3x revenue and 10.5x EBITDA. Finally, ITG is now included in the sub sector following its June 30 IPO and ended the period at 0.9x revenue and 8.2x EBITDA.
Momentum slowed in the Distributors and Logistics Services sub sector as it was essentially flat with a three-month gain of 0.2% following a 22.8% gain last period. Strong gains at Insight (up 28.3%) and PC Connection (up 23.6%) were offset by an 8.9% decline at CDW, the largest market cap company in the sub sector. Insight has now posted double-digit gains in back-to-back periods following its 81.8% gain last period. The sub sector is down 5.4% for the full year period, an improvement from the more than 15% loss reported in our summer report. CDW (down 19.5%) was the main drag on the index over the past year, while PC Connection (up 45.6%), Insight (up 37.8%) and ePlus (up 26.8%) all posted strong gains. Sub sector multiples closed out the period at 0.9x revenue and 10.5x EBITDA. Both are lower than year-ago multiples of 1.0x revenue and 11.8x EBITDA.
M&A activity in the Telecom Business Services sector remained strong in our fall reporting period. We counted 24 transactions over the past three months, only slightly below the 26 in our summer reporting period, while total announced transaction dollar value clocked in at a robust $3.2 billion. Two transactions that each topped $1 billion, MasTec’s acquisition of The Superior Group and Softcat’s acquisition of General Datatech, accounted for $2.7 billion of this total. For year-to-date 2026, we are now at 66 deals with a total announced transaction dollar value of $3.8 billion, which already exceeds the 2025 full year total of $3,3 billion. In terms of the number of announced deals, 2026 is on pace to have the most deals of any year since 2022.
The Telecom Engineering and Construction sub sector accounted for 12 transactions (down from 19 last period) and $1.9 billion of announced transaction value. This included the period’s largest transaction, MasTec’s $1.7 billion acquisition of data center-focused electrical contractor The Superior Group. Data centers were also a theme in Salute Mission Critical’s acquisition of T5 Data Centers and Recognize’s acquisition of Smartlink. Fiber and broadband deals remained active, including FBR Solutions’ acquisition of Southeastern Cable, CIRCET GROUPE’s acquisition of Sunrise Telecom and newly public ITG’s acquisition of Full Circle Fiber. We also saw three structured cabling and systems integration deals, including Pavion’s acquisition of Communication Company and Catech Systems’ acquisition of Envision Technology Group. Internationally, F2 Telecom acquired South Korea’s SK TNS for $279.4 million.
The Distributors and Logistics Services sub sector also had 12 transactions, up from seven last period. Total transaction dollar value was $1.3 billion. Eight of the sub sector’s transactions involved communications and technology distributors, led by Softcat’s $1.1 billion acquisition of General Datatech and ScanSource’s $220.5 million acquisition of Frontier Technology. TBSI constituent ePlus also acquired Daymark Solutions, while Presidio acquired LookingPoint and Pinnacle Technology Solutions acquired Cisco partner Network Solutions. The remaining four deals involved IT asset disposition, refurbishing and device distribution businesses, including Telamon’s acquisition of Retire-IT.
MasTec’s acquisition of The Superior Group was the only transaction with announced multiples this period. The deal was valued at 1.0x revenue and 6.9x EBITDA. While healthy, these multiples are somewhat below what we have become accustomed to seeing for companies that operate in the data center space.
Richard Pierce
Managing Director
Managing Director
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