Telco consolidation to keep regulators busy

James Robinson/Ovum
Ovum
Consolidation was a hot topic in Europe in 2013 as operators looked to gain a foothold in some markets but retreat from others. The EC’s “Connected Continent” proposals for a reform of the telecoms regulations in Europe did not explicitly deal with the mergers and acquisitions issue despite many operators claiming that facilitating such combinations is necessary for the future profitability of the sector. Nevertheless, several deals concluded last year, while many remain on the table for 2014.
 
The merger wave has also not been confined to Europe, with HKT keen to proceed with its takeover of CSL in Hong Kong, while Telefonica’s reported purchase of TIM Brazil is continuing to generate headlines. In the US, AT&T, Sprint, and T-Mobile all snapped up smaller carriers in the past year. Recent rumors of a combination between Sprint and T-Mobile may be just that; such a deal would face an uphill task in getting approval from US competition authorities.
 
Telcos looking to increase their presence in some markets, bow out of others
 
The activity of several operators in 2012/2013 shows how some are attempting to enhance their presence in certain markets while others are aiming to secure their positions in a fewer number of markets.
 
In December 2012 the EC announced that it had finally granted approval to 3 Austria to proceed with the acquisition of France Telecom’s subsidiary Orange Austria. The merger resulted in a reduction in the number of mobile operators from four to three, but allowed 3 to gain some 900-MHz spectrum as well as valuable spectrum in the 1800-MHz band, which it could use to support rollout of 4G services.
 
On the fixed side, Vodafone completed the acquisition of Kabel Deutschland in October 2013. The deal represents Vodafone’s single biggest M&A activity since its 2007 entry into India and gives it access to 5.0 million broadband and 7.6 million direct TV customers in Germany. By buying such fixed assets Vodafone is showing that it is prepared to take audacious steps to nurture its European operations back to health.
 

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