Communications industry: on the verge of massive consolidation

Spectacular change by 2020?

In the recent past, the communications industry has been announcing M&A initiatives at an unprecedented pace, with a mix of large multi-billion pound deals and smaller operations. We – like many of our peers – anticipate that by 2020 the global communications services providers (CSPs) landscape will see spectacular change.

Global Telecoms Insights: Operators Consolidation in Europe, Challenges & Opportunities

On the verge…

Major transformations have been frequent occurrences for the telecoms industry over the past 10-15 years around the globe, and this pattern will probably continue. Telcos have to, and will continue to, engage in drastic transformation plans to simplify, rationalise and modernise both their business and their IT. Operators in Europe are doing that in the same way as their peers in other parts of the globe, but, in addition, the telecoms industry in Europe has embarked on major operator consolidation. This is going to heavily impact all players in the industry: not only the operators themselves, but the entire ecosystem.

Consolidation as a strategy to overcome challenging market conditions

With the focus on minimising costs to reduce impact on margins, operators will be increasingly inclined towards consolidation as a strategy to overcome challenging market conditions:
  • Acquisitions: mobile operators in Europe are looking to augment their service offerings by acquiring fixed line or cable operators.
  • Regulations: in a highly regulated sector like telecoms, regulators naturally have a strong impact on the industry's long-term direction.
  • Revised M&A guidelines: European telecoms operators continue to discuss with regulators the merits of greater scale for profitable rollout of network upgrades and improved services that will ultimately benefit the consumer.
  • IT infrastructure consolidation: M&A deals bring significant IT challenges for telecoms operators, as it can be difficult to integrate back-end, customer-facing, and operational and business support systems throughout merged organisations.

Exciting times ahead

The past 10 years have been very exciting for the telecoms industry.
Now, the impending European Commission regulations regarding telecoms M&A, spectrum policies and infrastructure sharing will reshape the region’s industry landscape, with fewer but stronger CSPs.
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