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Key Drivers of Accenture’s Communications, Media & Tech Business

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Communications, Media & Technology growth trend

Accenture’s (ACN) Communications, Media & Technology operating segment, which contributes ~21% of its total revenue, remains a driving force for the company.

In the last five quarters, the Communications, Media & Technology segment has grown at a compound annual growth rate of 5%. The huge investment the company has made in software and platforms over the period has contributed to this growth.

In the graph above, we can see the Communications, Media & Technology segment’s growth trend over the last five quarters. During the period, it maintained an increasing trend. In the fiscal third quarter, the segment’s revenue came in at $2.1 billion, up 21.6% YoY (year-over-year).

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Identifying key catalysts

The telecommunications (telecom) space remains an important driving force in the company’s Communications, Media & Technology unit. A lot of mergers and acquisitions are taking place in the telecom industry due to stiff competition. ACN is also diversifying its business.

AT&T (T) is buying media giant Time Warner (TWX), while Verizon (VZ) has bought online media companies such as AOL and Yahoo. The demand for higher network speeds has led to the launch of 4G (fourth-generation) and the upcoming 5G (fifth-generation) networks. Thus, the telecom industry continues to invest heavily in the sector. New changes in the telecom space are creating more opportunities for Accenture in terms of support and maintenance. The company is generating more orders from the telecom space.

The aerospace and defense sector is another key driver for the Communications, Media & Technology segment.

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