The Covid-19 pandemic caused overall greenfield foreign direct investment (FDI) project numbers to decline by 17.4% in 2020. Most sectors were negatively impacted, with lockdowns making site selections near impossible. As the working from home era was born, the reliance on communications was paramount.
When it comes to greenfield communications and media FDI projects, GlobalData’s database shows that there were 857 projects in 2020 – the year the pandemic was declared – up from 794 the year before. Communications and media was one of only six FDI sectors to experience an annual increase in project numbers in 2020.
Out of the 1,651 communications and media projects tracked over this two-year period (2019 and 2020), the majority (90%) were new projects and the rest were expansions of existing operations.
What are the leading destinations for communications and media FDI?
Western Europe was the leading region when it came to attracting FDI projects in communications and media in 2019 and 2020. More than one-third (36.4%) of global projects were announced or opened in the region.
Asia-Pacific was the second most popular destination. However, sub-Saharan Africa (with an uptick of 86%) and South America (61%) recorded the largest annual increases in projects of any world region in 2020. Projects into North America also increased by 23%, driven by investments into the US.
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The US ranked as the leading investment destination for inbound communications and media FDI in 2020 – up from third in 2019. The US overtook Germany and the UK, who ranked second and third, respectively. There were 70 inbound investments into the US in 2020, up from 56 in 2019. Across the two years, the number of projects into the US (126), Germany (125) and UK (126) were almost identical.
The US saw the most investments from the UK in this time period (25 projects) and Germany (16), while US-based companies were the leading investors in both the UK (57 projects) and Germany (40).
FDI among the US, UK and Germany driving increase in numbers
The three largest destination markets for communications and media FDI saw some of the largest FDI projects created between each other in 2019–20.
In 2019, T-Mobile, a mobile telecommunication company and a subsidiary of Germany-based Deutsche Telekom, announced plans to build a new customer experience centre and secondary headquarters in Overland Park, Kansas, US. It is likely to add 1,000 new jobs. The company outlined that the expansions were dependent on its merger with Sprint (which took place in April 2020). It also planned an additional four new customer experience centres throughout the US.
Sky Studios, the UK-based production company and a subsidiary of Comcast, announced in 2019 its intention to build a new 13-hectare, state-of-the-art TV and film studio at Elstree in north London. The new studio will create 2,000 new jobs. The studio will open in 2022 with the aim of being the world’s most sustainable film and TV studio.
CloudHQ, the US-based global data centre provider, announced a new data centre campus in Offenbach am Main, Hesse, Germany. The campus will consist of two data centre facilities. Construction of phase one of the new campus has started and is planned to go live in 2023. The company will create 100 jobs at the location.
What are the top communications and media FDI business functions?
Technology infrastructure is the primary business operation for foreign investors in communications and media. Companies created 495 technology infrastructure and related communications and media FDI projects in 2020. This was up 46% compared with 2019. In 2019–20, technology infrastructure projects accounted for just over half (51%) of all communications and media FDI. Sales, administration and marketing was the second most popular business function. There were 223 of these office openings in 2020 – a modest 4% decline from 2019. Other operations were small in number as communications projects tend to be infrastructure based (such as data centres) or office openings.
The US (54 projects), Germany (47) and the UK (45) were the leading destinations for sales, administration and marketing operations. However, for technology infrastructure and related projects, the US ranked as the fourth-largest inbound market, with the UK seventh. Germany ranked first with 61 projects, closely followed by Spain (60) and Brazil (49).
What are the top subsectors for communications and media FDI?
Communications and media FDI is spread across multiple subsectors. Data centres and related was the largest subsector, with 604 investments in 2019–2020. The number of data centre FDI projects grew by more than one-third in 2020 compared with 2019. Big Tech companies such as Apple, Facebook, Google and Microsoft all announced $1bn-plus data centre investments abroad.
Wired and wireless telecommunications was the second-largest communications and media subsector. The subsector experienced 17% growth, reaching 160 projects in 2020. Vodafone created a new Spanish subsidiary in 2020. The group invested $480m in infrastructure projects in the country.
Where are the leading communications and media investors located?
Our analysis shows that the US was the leading source market for outbound communications and media FDI between 2019 and 2020. US company investments abroad remained relatively consistent, creating 296 projects in 2020 – 2% more than in 2019. Western Europe and Asia-Pacific were the top destination markets for US companies. Combined, the two regions accounted for more than two-thirds of US outbound FDI in the sector. The UK was the leading recipient country for US outbound investment.
Several countries showed large increases in communications and media FDI in 2020. The number of outbound projects from the UK increased by 47%, totalling 106 in 2020. Other top countries showing notable increases were Germany (50%), France (78%), Japan (111%) and Luxembourg (117%).
There were, however, several losers. Chinese outbound FDI in communications and media fell from 89 projects in 2019 to 42 projects in 2020. Sweden, Australia and Singapore also saw outbound numbers decline.
The Covid-19 pandemic brought a notable change in investments. In 2019, Huawei was the leading global investor, creating 34 communications and media FDI projects. These investments were primarily in the communications equipment subsector. However, in 2020, Huawei’s outbound FDI fell to ten projects. Vodafone and Oracle also heavily curbed their foreign investments in 2020.
In contrast, the leading investors in 2020, Amazon, NTT, Orange and Microsoft, all grew substantially in terms of outbound FDI project numbers. Most of Amazon’s investments in 2020 were in building data centres.
Communications and media is expected to continue its growth in 2021. There will be a continued increase in the number of data centre investments as business and individual usage continues to rise. Additionally, there will be a notable spike in 5G projects as governments seek foreign investment to help build networks across their countries.