Is a New Wave of Telco Mergers in Europe About to Begin?

By Gary Kim June 15, 2012
How big will a service provider have to be in the European market to survive and thrive in the next phase of telecom industry evolution? It's a logical question now that Latin American mobile operator, America Movil has acquired a 21 percent stake in Telekom Austria, a move that is not expected to be the last such move by America Movil, to say nothing of what other firms might ultimately attempt as well.

America Movil will purchase five percent immediately, taking its current stake in Telekom Austria to 6.7 percent, and expects to buy the remainder later in 2012.

America Movil already has acquired 8.12 percent of KPN, the Netherlands telecom company, and the latest investment represents the third increase in just a week's time. Those moves are likely to spur additional defensive or offensive moves elsewhere in Europe’s telecom market. 

Consider that France Telecom's CEO, Stephane Richard recently told the telco's annual shareholder meeting that the recent bid by Mexico's America Movil for a substantial holding in The Netherlands' KPN could spark a wider shake-up in the European market

So how big might a firm have to become, to maintain European leadership? Fairly substantial, it might appear. Between them, Deutsche Telekom and France Telecom have a combined annual revenue of about 104 billion euros, about US$131 billion. 

The other observation might be that if France Telecom believes it is too small, at $46 billion euros, it suggests all other firms smaller than that might have to rethink their options as well. To be sure, consolidation in the telecom industry is nothing new. It has been a part of the U.S. industry for over 100 years, in virtually every segment of the business.

But it appears a new round of consolidation is about to begin in Europe.


Edited by Brooke Neuman

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Cortana/Siri vs. Alexa & The Road To Robotic Post Smartphone Era

By: Rob Enderle    5/3/2016

Last week Microsoft made it clear that Cortana would only work with Microsoft's browser and search products making people question its cross platform …

Read More

Looking For The Next iPod/Echo

By: Rob Enderle    4/29/2016

The Amazon Echo, not the Apple Watch, became the last iPod-like product largely because of a far more accessible price point, a more compelling name, …

Read More

Apple Needs Reset, Not Elon Musk

By: Doug Mohney    4/29/2016

Apple's 13 percent sales decline and subsequent stock price drop this week has lead to the usual crazy talk about how to "fix" the company. Vivek Wadh…

Read More

Is the Apple Bubble Finally Bursting?

By: Andrew Bindelglass    4/28/2016

Over the past 13 years, Apple has been one of the most successful companies in the world of tech, posting sales growths in 51 straight quarters. That …

Read More

Shared-Space Providers (Airbnb) Poised to Beat Ride-Sharers (Uber)

By: Steve Anderson    4/28/2016

Travel may be starting to make a bit of a comeback, as a new report suggests that shared-space providers like Airbnb and WeWork are on the rise.

Read More