For more than twenty years, I have had the opportunity to follow the regulatory evolution of telecommunications in Europe from different professional perspectives, not only from Telefónica. During this time, I have seen how a well-intentioned vision – maximising retail competition at all costs- has had its merits, but also led to fragmentation that is now taking its toll.
The lack of scale limits investment and Europe’s digital competitiveness
Oliver Wyman’s Capital Currents report illustrates this starkly: the average European operator serves 5 million customers; the average US operator, 107 million; and the average Chinese operator, 467 million. This difference in scale explains why Europe invests only €109 per capita annually in telecommunications, compared to €174 in the United States – a 37% gap that results in slower rollouts, less resilient networks and reduced capacity to compete in advanced digital services.
Connectivity is no longer just another service; it is the critical infrastructure underpinning productivity, scientific innovation, the green transition and the continent’s security. Without operators of sufficient scale, Europe will not achieve robust standalone 5G, universal enterprise fibre, sovereign data centres or AI platforms developed and governed within Europe.
In a world where technology defines geopolitical power, this is a risk we cannot afford.
Consolidation as the key to achieving competitiveness, sustainability and cohesion in Europe
Fortunately, the regulatory winds are shifting. The reports by Mario Draghi and Enrico Letta have placed dynamic efficiency – the sustained ability to invest and innovate – at the heart of the debate, and the European Commission has made boosting competitiveness and technological sovereignty one of its top political priorities.
At Telefónica, we are fully aligned with this vision. At our latest Capital Markets Day, our Chairman Marc Murtra stated unequivocally that Europe needs stronger, more integrated operators with greater investment capacity. As Oliver Wyman also highlights in its analysis, the strategic plan we have presented – focused on operational simplification, balance sheet strengthening and growth in B2B, AI, cloud and cybersecurity – positions us solidly and responsibly to contribute actively to the European consolidation that lies ahead.
In addition, Oliver Wyman identifies five major categories of transactions that will shape the next cycle: (1) national consolidation, (2) cross-border consolidation, (3) portfolio rebalancing, (4) adjacent growth acquisitions, and (5) infrastructure carve-outs.
One idea that I find particularly powerful and that I believe we should decisively incorporate into the debate is the following: responsible consolidation can and should be an explicit instrument of green policy and territorial cohesion.
We could present the European Commission’s analysis and even consider committing to assess the impact of transactions not only in terms of strengthening rural coverage or investment in 5G, but also against measurable targets for emissions reduction (such as sharing sites to minimise energy and landscape impact) and binding plans to close the digital divide between regions.
In this way, scale simultaneously generates economic efficiency, environmental sustainability and social equity: three unwavering priorities for the European Union.
Responsible consolidation to ensure European digital sovereignty
The case of Brazil, also analysed by Oliver Wyman and other experts, is highly illustrative. Following well-regulated consolidation, the three major operators launched standalone 5G, deployed more than 27,000 new sites and increased service quality and mobile ARPU by 4% annually between 2021 and 2024 – all without harming price competition.
Europe now stands at a crossroads. We can either cling to a 20th-century model that prioritises the number of operators above all else, or embrace a 21st-century digital industrial policy that enables us to:
- Have operators with sufficient scale to lead critical infrastructure and sovereign technology platforms.
- Align competition law enforcement with objectives such as investment, resilience, digital security, the green transition and territorial cohesion.
- Develop a shared vision among institutions, competition authorities and companies in each market that supports gradual, responsible consolidation in the public interest.
At Telefónica, we are ready to contribute to this project with all our technical and financial capacity and, above all, with the deep conviction that strengthening Europe’s digital infrastructure is not only good for our businesses but a moral obligation towards the citizens of this continent and future generations.
Digital sovereignty is not a slogan. It is the condition for Europe to remain a space of freedom, prosperity and sustainability in the 21st century. And to achieve it, responsible consolidation – well regulated and well explained – is now an urgent priority.
