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American Focus > Blog > Economy > Europe telcos urge more mega-mergers to catch up to US, China on 5G
Economy

Europe telcos urge more mega-mergers to catch up to US, China on 5G

Last updated: March 14, 2025 7:55 am
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Europe telcos urge more mega-mergers to catch up to US, China on 5G
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Europe’s telecommunication firms are making a strong case for increased industry consolidation to enhance the region’s competitiveness in key technologies such as 5G and artificial intelligence. At the recent Mobile World Congress (MWC) trade show in Barcelona, several telecom CEOs emphasized the need for regulatory support to facilitate mergers and acquisitions, thereby reducing the number of carriers operating across Europe.

The current telecom landscape in Europe is characterized by numerous players operating in multiple EU countries and non-EU members like the U.K. However, industry leaders argue that this fragmentation hinders their ability to effectively compete on pricing and network quality. Marc Murtra, CEO of Telefonica, stressed the importance of scale in driving technological innovation and transformation, citing the examples of tech giants in the U.S. and China. He called for regulatory reforms to enable the consolidation of the European telecom market, allowing for increased investments in cutting-edge technologies.

Christel Heydemann, CEO of Orange, echoed similar sentiments, noting that while some consolidation efforts have been initiated, more needs to be done to ensure Europe’s competitiveness globally. Orange recently completed a merger in Spain and is actively pursuing further consolidation opportunities. However, Heydemann emphasized the need for stronger regulatory support to drive meaningful change in the industry.

During his keynote address at MWC, Tim Höttges, CEO of Deutsche Telekom, emphasized the need for a reevaluation of competition policies to enable market consolidation. He highlighted the success of markets like the U.S. and India, where a smaller number of dominant players have emerged, leading to greater efficiency and innovation. Höttges called for the establishment of a European single market in the telecom sector to foster growth and competitiveness.

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The push for industry consolidation in Europe comes at a time when global competition in telecommunications is intensifying, with countries like the U.S. and China taking significant strides in technological advancement. By streamlining operations and promoting collaboration through mergers and acquisitions, European telecom firms aim to position themselves as leaders in the development and deployment of next-generation technologies. Regulatory reforms and strategic partnerships will be key in achieving this goal and ensuring Europe’s continued relevance in the digital age. Europe’s telecom industry is facing challenges as it struggles to keep up with the rapidly evolving landscape of digital technologies. Telecom firms have been investing heavily in new technologies such as AI and 5G networks in an effort to move beyond the traditional model of laying down cables for internet connectivity. However, this modernization has come at a high cost, with sluggish revenue growth and an inability to effectively monetize networks compared to tech giants like Netflix.

At the recent Mobile World Congress (MWC), mobile network operators highlighted their use of AI to enhance network quality, improve customer service, and gain market share. Despite these efforts, European telco executives believe that they could further accelerate their digital transformation if they were allowed to merge with other multinational players.

The European Commission has issued a “Competitiveness Compass” calling for revised guidelines on mergers to prioritize innovation and investment intensity in strategic sectors. Former European Central Bank President Mario Draghi has also proposed radical reforms through a new industrial strategy to boost competitiveness. This includes a Digital Networks Act to incentivize telcos to build next-generation networks, reduce compliance costs, enhance connectivity, and harmonize EU policies.

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There is a push towards reducing regulations and fostering a more competitive environment to encourage consolidation in the telecom industry. However, there is still a long way to go for transformative cross-border mergers and acquisitions to take place.

Industry analysts believe that European telco CEOs have been vocal about the need for consolidation and growth-friendly regulations. However, simplifying, modernizing, and automating operations and legacy technologies are crucial for telecom firms to adapt quickly to changing customer needs and market dynamics. This transformation is expected to lead to increased partnerships, M&A activities, and integrated business models in the coming years.

Overall, the telecom industry in Europe is at a critical juncture, balancing the need for innovation and competitiveness with the challenges of revenue growth and monetization. Consolidation, regulatory reforms, and digital transformation are key focus areas for telcos looking to thrive in the evolving digital landscape.

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