Technology, media and telecoms companies can see the light at the end of the credit crunch tunnel

One year on from the start of the credit crunch, TMT companies (technology, media and telecoms) are bucking the doom and gloom trend by remaining optimistic about the future of their businesses, according to research from accountants and business advisers BDO LLP.

Nearly a quarter (23 per cent) of TMT companies are forecasting growth of more than 20 per cent over the next three years, and almost two-thirds (62 per cent) are forecasting growth of more than 10 per cent.  

In addition, an overwhelming majority of CFOs (80 per cent) are confident that their companies will hit their revenue targets for growth over the next three years.

Julian Frost, head of TMT at BDO, says: “Given the current economic climate, these are an astonishingly positive set of results, which shows just how resilient these businesses are.  This is in stark contrast to a number of other sectors across the UK who are struggling at the moment.”

“Despite there being scores of column inches filled with doom and gloom, there is a light at the end of the tunnel for some sectors of the economy,” he highlights.

While the figures have shown that two thirds (60 per cent) of companies have found that the credit crunch has harmed their ability to raise capital, three quarters (75 per cent) are maintaining that it remains easy or very easy for their company to gain access to the funding it may need to operate effectively*.

“While the cost of capital has risen, causing headaches for some businesses, the majority of CFOs in TMT companies have found that getting access to funding is not yet a worry,” points out Frost.

“Highlighting the current strength of their business, 40 per cent of respondents outlined that their companies are planning an exit within the next five years.  For those planning an exit, the most popular routes are trade sale (25 per cent) and selling to a competitor (10 per cent).  

“This research has shown that there are a number of reasons for the TMT sector to be optimistic at the moment.  Partly this resilience is due to the fact that savings from IT projects can be measured, therefore they continue to be valued more highly, and are easier to commit to, than less tangible investment plans whose benefits are less easy to measure,” continues Frost.

“Furthermore, IT spending is usually part of a medium term plan which can't be turned on and off at will unlike other areas of a business.”

“While these may look like ambitious growth plans, TMT heads are quietly confident that they will achieve their desired growth,” concludes Frost. 

For more information, please contact Dee Crooks at BDO on 020 7893 2761 / 07815 172 051 or email dee.crooks@bdo.co.uk

Notes to editors:

* Raising capital is obtaining further external investment (i.e. through venture capital, going to market or private equity backing), whereas access to funding will also include traditional lenders (i.e. banks).

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