Report: European telcos play down pan-European network idea

Tools

European telecoms operators want more consolidation in a crowded market, unnamed industry sources told Reuters, but have not discussed creating a single network for the continent with competition authorities in Brussels.

The Financial Times reported earlier that top executives of Europe's largest fixed and mobile operators held discussions on the creation of a pan-European network that would unite the continent's fragmented national markets.

According to an earlier Reuters report, the news caused a boost in telecoms stocks and helped European shares advance to trade near a 22-month peak.

The FT report said the idea of pooling telecoms infrastructure emerged at a private meeting late last year between Joaquín Almunia, the European Union's competition chief, and bosses of Europe's biggest groups, including Deutsche Telekom, France Telecom, Telecom Italia and Telefónica.

While a spokesman for Almunia confirmed to Reuters that he wanted a "genuine single market" in telecommunications rather than the present patchwork of national companies and subsidiaries, the unnamed industry sources said the meeting in late November focused on whether the large number of European operators could be reduced through mergers and takeovers.

Reuters quoted sources familiar with the meeting as saying that any talk of establishing a single European network was still theoretical. "The talks were centred in consolidation in Europe and in sharing networks, and not in a single market or in a single telecoms network in Europe," the source said.

The FT had also cited unnamed people familiar with the discussions as saying that the executives left the meeting with the intention of exploring the idea of a pan-European network further. Europe's dominant telecoms operators are finding it increasingly hard to compete amid the financial difficulties faced by many countries, as well as due to the competitive threat posed by new technology players using their networks.

"The operators expressed a deep sense of frustration and agreed to bring constructive ideas of how a European market could work," the FT quoted one person familiar with the meeting as saying. "Objections won't come from Europe, they will be from the [EU's 27 national] regulators."

Markets reacted favourably to the earlier FT report: shares of Deutsche Telekom, France Telecom and Telecom Italia were 2.6 to 5.5 percent higher, according to Reuters.

"What the share prices reflect now is a chance that these companies could reduce their costs by building a single network across Europe," John Karidis, an analyst at Oriel Securities, told Reuters.

The FT further noted that while Almunia has taken a tough stance against national mergers that reduce competition, he has indicated more openness to cross-border tie-ups that would help build a single EU market, generate cross-border services and drive digital investment.

For more:
- see this FT article (sub. req.)
- see this Reuters article
- see this separate Reuters article

Related Articles:
KPN CEO pushes for network sharing with O2 Germany
France Telecom admits to network sharing talks with rivals
Orange exec: Network sharing only option for LTE operators
Vodafone, KPN knock EU over opposition to mergers
EU to launch 'full probe' into Hutchison's takeover of Orange Austria
Mallinson: EU competition authorities should not intervene
France Telecom CEO Richard rages at EC over hints of collusion

grateful