Brussels has kicked off a series of telecom mergers in Europe. Competitiveness officials approved Telefónica's purchase of E-Plus and Vodafone buying Ono, which means that the landscape looks different because there are fewer players, but they are each strong. The EU's decision could speed more consolidation within the sector and reduce the number of mobile device operators by three or four times within individual countries and upward of four to six times for international operators.
This was bound to happen, because operators have been wanting to consolidate the sector so that they can increase market share and create more favorable circumstances. The sector has complained about Europe's over-regulation, which creates a fragmented market compared to the United States, Japan and China and has caused profits to fall steadily for European telecoms. The Telefónica deal makes the company the leader in mobile communications in Germany and locks in guaranteed revenue, although it forces Alierta to sell around 30% of his Germany network.
Further, we could see some relaxation of nearly 27 regulatory laws in Europe today. The competition is fierce considering that the only way to grow in a mature market is to rob clients from your rivals, which forces you to lower prices. This situation is good for consumers, who have seen mobile telephone prices fall nearly in half since 2005. Starting now, we should start to pay close attention to the sector. Merger and acquisition fever has just started.
