For the third year in a row, the amount of mergers and acquisitions in the European telecommunications sector fell in 2023, with an amount slightly above 60 billion euros. But these figures, which can be explained in particular by the slowdown of the great wave of sales of mobile infrastructure or optical fiber at the end of the 2010s, are misleading.
Indeed, the world of telecoms has been undergoing a profound movement of restructuring over the past twenty-four months. “Faced with unprecedented industry transformation and new competitive threats, many telecommunications companies are turning to mergers and acquisitions to build new capabilities and evolve their businesses for the next era”explains a study by Bain & Company published at the end of November 2023.
This transformation is due to the explosion of data traffic on telecom networks, fixed (optical fiber) and mobile (4G-5G). From month to month, this continues to increase, in particular due to the massive use of video platforms such as TikTok, Instagram, YouTube or Netflix. Over the past decade, global mobile traffic has doubled every two years, according to the latest report from Swedish telecom equipment manufacturer Ericsson, released in November 2023. And it could triple again by 2029. At this horizon, in Western Europe alone, average smartphone traffic is expected to grow by 16% per year.
A boon for operators, guaranteed to sell fixed or mobile subscriptions to access the Internet. However, few have been able to correctly monetize and promote this explosion of uses. Alphabet, the parent company of Google, is worth nearly 1,800 billion dollars on the stock market (1,645 billion euros), ten times more than the cumulative capitalization of the four largest European telecoms groups in terms of number of subscribers (Vodafone, Telefonica, Deutsche Telekom and Orange).
For years, operators have complained about having to overinvest in their networks to route the traffic generated by video platforms under good conditions, without the latter taking responsibility for part of these investments. In Europe, where it is common to see more than three large operators per country, competition does not allow them, they argue, to charge prices in line with usage. The rise in interest rates over the last eighteen months, which increases the cost of the debt necessary for these investments, complicates their equation a little more.
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