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Consolidation within Europe’s fragmented telecommunications sector could unlock significant growth potential for mobile operators, according to Vivek Badrinath, director general of the GSMA.
Speaking at a conference hosted by the mobile industry body to mark the start of Denmark’s presidency of the Council of the European Union, Badrinath argued that a more unified market would enable operators to scale more effectively and compete on a global footing.
The GSMA, which represents the mobile telecommunications sector widely viewed as critical to bolstering Europe’s global competitiveness, has warned that its members face persistent barriers to long-term infrastructure investment.
Chief among these, it says, is the limited ability of operators to achieve scale. Mobile providers argue that a more consolidated market, with fewer, larger players, would strengthen incentives to invest in next-generation networks, ultimately enhancing service quality and sustaining customer satisfaction.
“Consolidation brings scale, and scale is king,” Badrinath told attendees at the GSMA’s Copenhagen conference.
Badrinath said Europe needs a single market with competition policy reform and merger regulation, a reduction in the regulatory burden, paired with less uncertainty in the investment environment.
However, Danish Digital Affairs Minister Caroline Stage Olsen expressed scepticism about such a push for consolidation during her conference intervention.
“Another Draghi [report] element is consolidation. I am cautious on whether consolidation will lead to increased investments,” Olsen said, warning that European consumers could end up paying higher prices for lower quality.
The Minister said that while she is “worried about consolidation”, she added that she’s aware that Denmark has been fortunate to have a telecoms sector that consistently invests large sums into network expansion.
Digital competitiveness is a major presidency theme
Addressing Denmark’s priorities for when it takes over the rotating presidency of the Council of the European Union this July, Olsen said that Europe’s digital competitiveness will be a major theme, one in which the telecoms sector plays a major role.
“We will focus on reducing regulatory burdens and we will focus on improving framework conditions for innovation and investments,” Olsen said, acknowledging concerns that Europe is falling behind in some sectors on the global stage. She called for Europe to strengthen its competitiveness while not ignoring the geopolitical crises the world is facing.
“We must have a regulatory landscape that is safe, robust, and future-proof,” Olsen said, describing the ideal one as being predictable while ensuring a strong and well-functioning market.
Slashing red tape welcome, but it is not enough
Reacting to Olsen’s address, Regional CEO for the operator ‘3’ in Scandinavia and Austria, Morten Christiansen argued that while simplifying rules and cutting down on red tape would certainly be welcome, stopping there wouldn’t solve the major problems companies like his are facing.
He highlighted that the market value of European telecoms companies has been falling over the years as the markets they operate in are not growing.
Reports show Europe has around 100 operators, with the average one serving just 5 million subscribers, compared to over 100 million in the US, where the market is dominated by three main operators.
TDC NET CEO Michel Jumeau echoed Badrinath’s views on consolidation, saying the time to consider a renewal of the telecoms sector was now, with the next decade set to look very different compared to the last 20 years.
Jumeau also stressed the importance of greater investments in security.
“We need to invest a bit more in security to secure our infrastructure. We need to invest more to become independent,” Jumeau said, calling for revised regulations that promote scale and allow for such investments.
Similarly, during his address, Danish Resilience and Preparedness Minister Torsten Schack Pedersen described the telecommunications sector as a fundamental part of the areas his portfolio covers. The Minister said the world was facing a challenging security situation with hybrid warfare, cyber-attacks, and espionage all threatening to impact the public sector and businesses.
“Telecommunications is the foundation of all digital communication and acts as a first line of defence to protect our data and information,” Pedersen said.
[ Edited by Brian Maguire | Euractiv’s Advocacy Lab ]
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