Telecom consolidation in Europe - Same drivers, new challenges

This report starts by presenting a panorama of the major moves and trends that have been observed in Europe recently. It continues with an examination of how the regulatory stance seems to have evolved since the new European Commission took office in late 2014 and looks further at the remedies that have been imposed by DG COMP between 2012 and 2016.

The question of how markets and users are being impacted by the wave currently sweeping European telecoms has been raised many times. The answer may differ, however, depending on who is responding. Chapter 4 will provide a short review of some of the major studies published on the issue over the last year or so.

The following chapter looks at whether mergers have actually held what operators were promising and presents the evolution of some key performance indicators prior to the merger under consideration, and thereafter.

Finally, the report presents a brief perspective of what factors might shape M&A activities in the short and medium term.

List of players

• Altice
• AT&T
• BASE
• Bouygues Telecom
• Cablevision
• DirecTV
• Drei Austria
• Drillisch
• EE
• Enel
• E-Plus
• Hutchison 3G
• Iliad
• Jazztel
• Kabel Deutschland
• Liberty Global (JV)
• MEDIALAAN
• Meteor
• Numericable
• O2
• ONE
• ONO
• Portugal Telecom
• SFR
• Suddenlink
• TalkTalk
• Telefónica
• Telenet
• Telenor
• Telia
• Vimpelcom
• Virgin Media
• Vivendi
• Vodafone
• Western Wireless
• Yoigo
• Ziggo

Slideshow's contents

• Drivers and hurdles for consolidation
• Convergence and in-market mobile transaction at the core of consolidation
• Major recent transactions
• Tougher regulatory stance
• Literature review: no clear conclusions on impact of M&A
• Consolidation: success stories (?)

Table of Contents

1. Executive summary
1.1. The rationale for market consolidation persists
1.2. but the tune has changed
1.3. Towards new ways of consolidation?

2. Methodology & definitions

3. Introduction

4. Main moves in Europe
4.1. General trends: national mobile and convergent moves
4.1.1. M&A trends in Europe
4.2. Most important deals
4.2.1. Vodafone: towards a pan-European convergent giant, via a Liberty Global merger?
4.2.2. Altice: global and convergent moves
4.2.3. Hutchison: a global mobile giant
4.2.4. Orange
4.3. Detailed list of moves to consolidation

5. Regulation, the evolving stance of the Commission
5.1. The Competition Commissioner on telecom mergers
5.2. Regulatory remedies

6. Literature review
6.1. Chamber of Labour of Vienna
6.2. RTR
6.3. Frontier Economics
6.4. European Commission, DG COMP - ACM - RTR
6.4.1. TMO - tele.ring
6.4.2. TMO - Orange
6.5. WIK

7. A success story for operators?
7.1. EE
7.2. H3G - Orange
7.3. TMO - Orange
7.4. Orange - Bouygues Telecom

8. Outlook: will it be business as usual, or is the next stop cross-border consolidation?

List of Tables

Table 1: Potential convergent footprint of Liberty Global and Vodafone
Table 2: Recent Altice M&A in Europe
Table 3: Hutchison recent M&A in Europe
Table 4: Orange recent M&A in Europe
Table 5: Major European M&A activities
Table 6: Orange + TMO to EE: Trends in revenue, EBITDA, capex, customer base and ARPU

List of Figures

Figure 1: Drivers - hurdles matrix
Figure 2: M&A matrix
Figure 3: Number of MNOs, by country
Figure 4: Acquisitions of main players in 2014-2015 and pending in 2016
Figure 5: Volume of acquisitions in Europe
Figure 6: Compared footprints and overlap of Liberty Global and Vodafone
Figure 7: Hutchison European footprint
Figure 8: Major European M&A activities in 2015 & 2016
Figure 9: EC merger decisions
Figure 10: EC assessment of Orange - Jazztel merger
Figure 11: EC assessment of H3G - O2 merger
Figure 12: Price evolution in Austria, according to AK Wien
Figure 13: Evolution of mobile prices in Austria compared to ten-country (?c') control group
Figure 14: Average revenue per minute in three- and four-player markets
Figure 15: Capex in three- and four-player markets
Figure 16: Price evolution in Austria pre- and post-merger
Figure 17: Price evolution in Austria (AT), pre- and post-merger, compared to international markets
Figure 18: Price evolution in the Netherlands, pre- and post-merger
Figure 19: Price evolution in the Netherlands. pre- and post-merger, compared to international markets (low and medium baskets)
Figure 20: WIK country rankings for consumer outcomes, competition, investment and other factors (2013)
Figure 21: Evolution of EE market share before and after merging in 2010, 2007-2014
Figure 22: Evolution of cumulative BT UK + Orange UK then EE (from 2010) indicators, 2007-2014
Figure 23: Evolution of EE customer base and ARPU, 2007-2014
Figure 24: Evolution of market shares in Austria, 2009 - 2015
Figure 25: ARPU evolution in Austria, 2009 - 2015
Figure 26: EBITDA evolution in Austria, 2011 - 2015
Figure 27: Evolution of market shares in the Netherlands, 2005 - 2015
Figure 28: ARPU evolution in the Netherlands, 2005 - 2015
Figure 29: EBITDA evolution in the Netherlands, 2005 - 2014
Figure 30: French operators Top 4 market shares at December 2015