Over the past year there has been a heightened focus on increasing innovation and productivity, in both the EU and UK, in order to improve economic growth and boost Europe’s resilience and competitiveness on the global stage.
Telecom networks help to underpin nearly every sector of the economy and so play a key role in supporting and promoting growth. However, there is a concern that Europe is lagging behind in the roll-out of next-generation telecom networks, namely fibre broadband and 5G, and may therefore miss ambitious coverage targets. For example:
- The EC’s white paper states that “Current trends concerning the trajectories for the digital infrastructure targets laid out in the Digital Decade Policy Programme 2030 are a cause for concern. As regards fibre coverage, progress beyond 80% by 2028 does not seem likely, putting the achievement of the 2030 target of 100% in doubt.”
- The Enrico Letta report says that “the current delay in the deployment of 5G in the European Union raises significant concerns, with consequences that go far beyond the telecommunications sector itself because a delayed rollout will have a widespread negative impact on all sectors of the economy”. Observers often draw comparisons with the US, which has considerably more extensive 5G coverage.
Figure 1 Percentage of the population covered by at least one 5G mobile operator

Source: ETNO – The state of digital communications 2024 (based on Analysys Mason data)
Some commentators have suggested that relatively low future profitability expected in the EU telecoms sector may be slowing down investment in Europe, alongside the step change in capex required to achieve widespread coverage of next-generation networks. As a consequence, there have been various proposals about how to speed things up.
The proposals on the table
A plethora of ideas have been put forward on how to accelerate the roll-out of next-generation networks. Within the EU, there is a continued emphasis on creating a truly single market and increasing the scale of telecom operators. Last year’s well-publicised report by former European Central Bank president Mario Draghi, and the EC’s white paper, propose to facilitate greater cross-border consolidation as a way of increasing the scale of telecom operators; Draghi further suggests that in-country consolidation could help – as does the earlier report by Letta. The various reports discuss other options for the telecoms sector, including the earlier release of spectrum, harmonised rules for spectrum auctions, the removal of ex-ante regulation and possible changes to net neutrality rules.
The rest of this article focuses on the merits of cross-border consolidation as a means of improving outcomes in the sector – before turning to in-country 4-to-3 consolidation. On balance, ensuring that any assessments of in-country mobile mergers are fit for purpose is likely to lead to higher pay-offs than focusing policy efforts on actively promoting cross-border consolidation.
The likely impact of cross-border consolidation
Unlike in-country consolidation, cross-border mergers do not enable Mobile Network Operators (MNOs) to densify their site network or deploy more spectrum – which can increase capacity and the quality of service that MNOs can offer consumers. To be sure, there are other potential benefits from cross-border consolidation, but they may not be as clear-cut:
- The ability to use a single core network across multiple countries. This could be useful, although core networks represent a relatively small share of the total network costs of mobile networks (the majority of the costs relate to the mobile access network, called the Radio Access Network (RAN) and an even smaller share of total costs (which include retail costs).
- Being able to provide widespread coverage across the EU. This may not be that much of an advantage, as MNOs can also rely on international roaming agreements when their customers travel abroad.
- Increased scale when developing new mass-market software applications. For the majority of apps/software, cross-border scale confers benefits. This is because most software is subject to fixed development costs, which are more likely to be recovered the larger the customer base over which they are spread. However, in principle MNOs should be able to offer apps/software in countries in which they don’t have their own mobile networks. Given this, it’s uncertain that greater cross-border consolidation would put them in a stronger position to compete for an increased share in the apps market. Moreover, rivals for the development of apps include Big Tech companies, which are significantly larger.
- Greater bargaining power. Increased scale could give MNOs more bargaining power, for example when purchasing network equipment and cloud computing. However, a big increase in size may be required to make a material difference.
- Easier access to financing. This may be more of a second-order effect, as most MNOs are already large enough to secure financing.
The above is consistent with MNOs not having pursued significant cross-border consolidation in recent years, unless they were already present as a fixed operator and were thereby creating a converged operator. Given this, a significant policy focus on facilitating cross-border consolidation may not lead to substantial pay-offs. Some of the other proposals could, however, help. For example, the earlier release of spectrum and more appropriate planning regulation could help to boost the roll-out of next-generation networks.
Policy implications
Given that mobile markets are typically defined on a national basis, any cross-border mergers would not be expected to result in any significant horizontal overlap and so should not raise material competition concerns. The Draghi report suggests moving towards defining telecom markets on an EU-wide basis, but this would likely be contentious insofar as spectrum licences tend to be national and competition and consumer outcomes vary across EU member states.
In contrast, while recognising that any in-country 4-to-3 mobile tie-ups will need to be considered on a case-by-case basis, a policy shift could involve competition authorities:
- Adopting a longer timeframe when evaluating any efficiencies (as proposed by Draghi).
- Considering how rivals may respond to the potential efficiency gains of the merging parties.
- Being more open to ‘investment remedies’ should the competition authority have concerns about whether the potential efficiencies will materialise in practice.
This approach is in line with how the Competition and Markets Authority (CMA) assessed the recent 4-to-3 merger between Vodafone and Three in the UK.
More generally, an important question is to what extent there is a need to change merger laws/guidelines to place greater emphasis on innovation, as proposed by both British Prime Minister Sir Keir Starmer and Teresa Ribera, the EU’s new competition chief.
Commission President Ursula von der Leyen has already asked Ribera to carry out a review of the EU’s horizontal merger control guidelines, partly to ensure that they give adequate weight to innovation. The CMA also plans a review of its merger remedies. However, it is interesting to note that the CMA assessed the Vodafone/Three merger within the current UK merger framework.
Looking ahead
A number of EU member states still have four MNOs (Denmark, France, Germany, Italy, Poland, Slovakia, Slovenia and Sweden), and in-country consolidation might be pursued in some of these markets. If so, it will be interesting to see to what extent the EC puts greater weight on innovation in any merger assessment and whether it draws on the approach taken by the CMA in the recent Vodafone/Three merger.