Europe telcos urge more mega-mergers to catch up to US, China on 5G
Europe’s telecommunication firms are calling for more industry consolidation to enhance their competitiveness in key technologies such as 5G and artificial intelligence. At the recent Mobile World Congress (MWC) trade show in Barcelona, CEOs of several telecoms firms emphasized the need for regulators to facilitate mergers and acquisitions to reduce the number of carriers operating across the continent.
Currently, there are numerous telco players operating in various EU countries and non-EU members like the U.K. However, telco chiefs argue that this fragmented market structure hinders their ability to effectively compete in terms of pricing and network quality. Marc Murtra, CEO of Spanish telecom giant Telefonica, highlighted the importance of scale in driving technological innovation and positive change in Europe. He stressed the need for regulatory support to enable industry consolidation and investment in cutting-edge technologies.
Christel Heydemann, CEO of French carrier Orange, echoed similar sentiments, noting that while some consolidation activities have taken place in Europe, more actions are needed to ensure the region’s competitiveness on the global stage. Orange recently completed a merger of its Spanish operations with local provider Masmovil, and the U.K.’s Competition and Markets Authority approved a merger between Vodafone and Three.
During his keynote address at MWC, Tim Höttges, CEO of Deutsche Telekom, emphasized the benefits of market consolidation seen in other regions like the U.S. and India, where a handful of major players dominate the telecom industry. Höttges called for a reform of competition policies in Europe to allow telcos to merge and streamline their operations for increased efficiency.
The CEOs collectively emphasized the need for a European single market in the telecom industry to drive innovation, investment, and competitiveness. By enabling industry consolidation and fostering a more conducive regulatory environment, European telcos believe they can better position themselves to compete with global tech superpowers like the U.S. and China. Europe’s telecom industry is facing a crucial moment of transformation as it strives to keep up with the rapidly evolving digital landscape. With the rise of over-the-top players like Netflix and the increasing demand for advanced technologies such as AI and 5G networks, traditional telecom firms are under pressure to innovate and adapt.
Investing heavily in new technologies, European telcos are moving away from the outdated model of simply laying down cables for internet connectivity. However, despite these efforts, revenue growth has been sluggish, and the sector is struggling to monetize its networks effectively compared to tech giants.
At the recent Mobile World Congress (MWC), mobile network operators showcased their use of AI to enhance network quality, improve customer service, and gain a competitive edge. Yet, industry leaders believe that further digital transformation could be accelerated through mergers with other multinational players.
The European Commission’s “Competitiveness Compass” has called for revised guidelines on mergers to prioritize innovation and investment in strategic sectors. Former European Central Bank President Mario Draghi has also recommended radical reforms to enhance the EU’s competitiveness, including a new Digital Networks Act to incentivize telcos to build next-generation networks.
The push for consolidation and a more competitive environment is evident in the industry’s efforts to streamline operations, modernize technologies, and automate processes. This transformation will enable telcos to adapt quickly to changing customer needs, forge new partnerships, and potentially engage in mergers and acquisitions.
While the road to cross-border consolidation may be long, industry analysts believe that European telcos are poised to embrace change and position themselves for success in the evolving digital landscape. By leveraging new technologies, simplifying operations, and adapting to market realities, telecom firms in Europe can stay competitive and thrive in the digital age.
