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Europe

Eurosqueeze?

12:35 PM -- The general consensus in the carrier community, as articulated this week by Benoit Scheen, CEO of Belgian operator Mobistar SA (see Euronews: Sept. 1) is that there are too many service providers (particularly mobile) in Europe, and that a wave of consolidation will drastically reduce that number, leaving a smaller group of pan-continental players that can survive, and even thrive, from the resulting economies of scale and achieve significant cashflow.

But how many operators will disappear (be acquired, merge, or go out of business) in, say, the next 10 years? Would the European Union's Competition and Information Society authorities, and national regulators, allow individual markets to shrink to just a few players, limiting consumer choice?

If it did come to that, it's not hard to guess which companies would likely survive such a process: Orange (NYSE: FTE)/Salt SA , Deutsche Telekom AG (NYSE: DT)/T-Mobile International AG , Vodafone Group plc (NYSE: VOD), and Telefónica SA (NYSE: TEF)/O2 stand out as Europe's Alpha Carriers.

Telekom Austria AG (NYSE: TKA; Vienna: TKA) (with its East European empire), Telecom Italia (TIM) , and possibly Telia Company might also make the cut, although Telecom Italia could conceivably get swallowed by the Telefónica empire, and TeliaSonera was, at one time, a France Telecom takeover target. (See Is Italian on Telefónica's Menu? , Telekom Austria Eyes Mobile Capex Cuts, and FT Drops $42B Bid .)

There are already signs that some of the biggest names are looking to solidify their positions: Look no further than the merger of Orange UK and T-Mobile (UK) to create the bizarrely named joint venture, Everything Everywhere (I haven't yet heard anyone use that name in regular conversation), to create the UK's largest operator by subscriber numbers. (See Orange, T-Mobile Do Everything Everywhere .)

But how far can this process go? I'd be interested to hear some views on the message boards below on whether the "Old Continent" will ultimately become a near single market with just five or six mega-carriers, or whether the dis-united states of Europe will retain its current service provider and cultural diversity.

And in case you're wondering about Benoit Scheen and Mobistar, which is Belgium's No. 2 mobile operator with around 4 million customers -– it's already part of the France Telecom empire… — Ray Le Maistre, International Managing Editor, Light Reading

bogdan.zytka 12/5/2012 | 4:24:47 PM
re: Eurosqueeze?

If you look at EU you will see that there are 4 European operators each having affiliates in their "zones of control". Nearly all MNOs & Incumbents in new EU member states are owned by DT, FT or Vodafone. Baltics fell to Telia. Old EU (save  France & Netherlands - which are strange countries anyway ;) ) has at least 2 big per country. But there is a trick - no one is investing in acquisitions in EU (maybe for local players), everyone is looking at Africa, Asia. So the situation as of now will be stable, with some local alliances like in UK (btw. T-Mobile and Orange are trying to do the same trick in Poland).


 

shygye75 12/5/2012 | 4:24:48 PM
re: Eurosqueeze?

For relatively small national markets, the Rule of Three holds up pretty well -- markets can support three operators, but beyond that, there be dragons. So the question is how the majors decide to partition Europe. Any regulatory or political effort to force a market to have more than that number of competitors is not likely to succeed. And yet, it's a pretty sure bet that the effort will be made.

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