European telecom consolidation long overdue but faces significant challenges
The consolidation of the European telecom companies has been a topic of discussion for many years, and while there are potential benefits to such consolidation, there are also several significant challenges that must be overcome, says GlobalData, a leading data and analytics company
Robert Pritchard, Senior Analyst at GlobalData, says: “Investors, carrier management, and the EU have identified Europe’s relative weakness when competing with tech market leaders in the US and China.”
GlobalData analysis identifies that rising costs of investment in next-generation access technologies and growing competition are forcing telcos to consider either retrenchment or consolidation.
Gary Barton, Research Director at GlobalData, observes: “Telcos have been changing their business models in the face of the costs of rolling out next-generation access services such as 5G and fiber broadband, with many carriers selling off their TV and media operations, and refocusing their operating footprints. The alternative to asset disposals is consolidation for scale.”
Telcos in Europe operate in a fragmented regulatory regime and the ongoing issues of ownership, security, and license allocation have hindered the incumbent consolidation. National governments continue to skew the market through continued ownership of stakes in carriers and so-called ‘golden shares’ that offer veto rights over who controls the operators.
Pritchard concludes: “The example of how the US market has evolved is a powerful argument in favor of consolidation. Perhaps the greatest challenge to the combination of European telcos is the ‘national champion’ concept where once dominant domestic carriers are still seen as champions, but in many cases are becoming market laggards.”
You must be logged in to post a comment Login