Executives from some of the European Union’s largest telecoms groups are looking at pooling network infrastructure, potentially creating a shared market network, to enable them to better compete with other markets globally.
The Financial Times…
Executives from some of the European Union’s largest telecoms groups are looking at pooling network infrastructure, potentially creating a shared market network, to enable them to better compete with other markets globally.
The Financial Times reported that executives from telcos including Deutsche Telekom, France Telecom, Telecom Italia and Telefonica discussed network sharing in a private meeting with European Commission vice president and competition head Joaquin Almunia.
According to the report, which cited several sources familiar with the discussion, meeting attendees expressed frustration at the fragmented nature of the European market, saying it restricts their ability to compete with large markets elsewhere.
The executives consequently agreed to look at how a single European market might work, an unnamed source was quoted as saying. In the source’s view, any objections to such a proposal are likely to come from the EU’s national regulators rather than Europe.
A person with knowledge of the matter told TelecomFinance that the idea of creating a pan-European network infrastructure emerged after the meeting with Almunia as an option for tackling broader issues. It should be considered in context of the time taken for regulators to approve Hutchison’s takeover of Orange Austria, the person noted.
European telecoms executives have long-expressed dissatisfaction with the region’s strict and disjointed regulatory frameworks, which differ markedly from markets such as China and the US.
Many have indicated support for network sharing agreements as a way of cutting costs and improving competitiveness and service quality.
Several companies have already entered into such agreements. The Irish units of Vodafone and Hutchison, for instance, have created a joint venture to pool their network infrastructure, while Vodafone and Telefonica have a similar partnership in the UK.
According to the FT report, meeting attendees have since discussed setting up a “newco” to combine their network infrastructure assets and associated debt.
The person with knowledge of the matter noted that while an EU-wide network-sharing agreement would likely take a long time to clear, the recent meeting with Almunia suggests the EC is starting to really appreciate the benefits that it could offer.
Almunia had indicated previously that he would be more open to cross-border consolidation than further in-country mergers.
In a speech in September last year in Washington the Commissioner told delegates that on the EU level further consolidation “can certainly be beneficial if it increases efficiency”.
