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EU actively encourages cross-border telecoms M&A

The European Union is pushing cross-border consolidation in the telecoms space, something that could have big implications for the bloc’s major players.

Talk of a single European telecoms market has intensified in recent days, and late last week telecoms.com learned from a spokesperson for the European Commission that it is indeed moving in that direction. Now there has been a more formal announcement from Internal Market Commissioner Thierry Breton, who made it clear that – amongst other things – the Commission is keen on the idea of operators from different markets coming together.

“The current fragmentation in Europe with sub-optimised business models based on national markets and high costs for national spectrum licences is holding back our collective potential compared to other continents,” said Breton, according to the transcript of a speech delivered at Business Finland on Monday.

“I believe that creating a true Single Market for telecommunications services also requires a reflection on encouraging cross-border consolidation, all while preserving fair and necessary competition for the benefit of our consumers,” Breton said.

It’s a carefully-worded statement; the Commission never misses an opportunity to highlight fair competition and its focus on the consumer. But there’s a clear message in there: cross-border consolidation – in whatever form that might take – would be a positive thing for the EU.

The European Commission has taken various different stances on in-market consolidation over the years; it has now eased somewhat on its previous insistence on four-player markets, for example. But while cross-border consolidation has often been discussed as a way for telecoms operators to gain the kind of scale enjoyed by their peers in the US and certain other markets, it has never really come to fruition.

The concept sits in a broader context for the European Commission. Breton confirmed that this month it plans to launch its much-hyped public consultation into the future of connectivity and infrastructure in Europe, which will include looking at the possibility of building a true single telecoms market across the bloc.

It will also address the issue – again, discussed ad infinitum – of making the big technology companies pay for the bandwidth they use, or contribute in some way to the rollout of 5G and beyond mobile networks and fibre. There were reports last week that Brussels might look to create some sort of fund for 5G and fibre networks and require big technology players to pay into it, but Breton did not give that level of detail in his speech.

“The investments which will be required to achieve our ambitions will be enormous and we need to ensure that they are matched by the availability of sufficient funding. The burden of this financing should not be only on the shoulders of the Member States or the EU budget,” he said. “At a time when technology companies are using most bandwidth and telco operators are seeing their return on investment drop, this also raises the question of who pays for the next generation of connectivity infrastructure.”

The consultation will cover two fundamental questions, he explained. Essentially, it will look at what infrastructure Europe needs to spend money on in order to lead the digital transformation, and how those investments should take place.

“The consultation will run for a couple of months and I look forward to receiving your input and expert views. We will then take stock and report on proposed way forward later this year,” Breton said.

Clearly, there are not going to be any quick answers here. And there will doubtless be much more talk about making the tech giants pay than there will be action. But there are plenty of big telcos operating in multiple European markets, so the establishment of a single market, or something much closer to that than we have today, is a realistic goal from this consultation.

 

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One comment

  1. Avatar Professor Peter Curwen 07/02/2023 @ 4:12 pm

    oN THE FACE OF IT, THIS IS A LOAD OF TWADDLE. LEAVING ASIDE THE ISSUE OF WHETHER WE ARE TALKING ABOUT FIXED-WIRE OR MOBILE OR BOTH, LET US ASSUME IT IS, SAY, ONLY MOBILE. iN THAT CASE IS THE IDEA THAT, SAY, VODAFONE SHOULD MERGE WITH ORANGE OR T-MOBILE, IN WHICH CASE THERE ARE GOING TO BE HUGE ISSUES OF DOMINANCE IN MARKETS WHERE THEY OVERLAP, OR JUST THE COMING TOGETHER OF RELATIVELY MINOR PLAYERS, OR WHAT? THESE ARE NOT STATE-OWNED COMPANIES SO YOU CAN IMAGINE THE FUN WHEN IT BOILS DOWN TO WHO TAKES OVER WHO- 50/50 MERGERS ARE CLEARLY NOT ON THE CARDS. ANSWERS ON A POSTCARD TO THE COMMISSION PLEASE.

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