Telefónica, Telecom Italia, Digi, and Orange are poised to shake Europe’s telecom landscape, especially following former ECB President Mario Draghi’s call for greater consolidation. But just as momentum seemed to build, a coalition of national competition authorities issued a joint statement that may put the brakes on some of these ambitions, at least in their markets.
Cross-Border vs In-Market Consolidation
Telecom executives are ready to consolidate, but only if regulators do their part. Telefónica’s CEO has urged authorities to relax merger rules, while Vodafone’s chief has called on Europe to adopt a more pragmatic stance—pointing to the UK’s Competition and Markets Authority (CMA) as a model for approving 4-to-3 mergers, like the Vodafone–Three deal. Deutsche Telekom’s CEO has echoed these sentiments, warning that market fragmentation is undermining efficiency and scale.
For now, the industry favors in-market moves. Cross-border mergers carry more regulatory risk and tend to offer fewer operational synergies. As a result, major pan-European deals appear unlikely in the near term, but national acquisitions or strategic transactions involving operators with cross-market footprints, are a strong possibility.
As telcos are making a move, it’s no coincidence that on April 22nd, regulators from several mid-sized EU countries issued a joint statement signaling that they are not planning to soften the rules.
Regulators Will be Tough if they Need to
The competition authorities of the Netherlands, Portugal, Belgium, Czech Republic, Austria, and Ireland recently issued a joint statement warning that any proposed telecom consolidation, especially when it involves infrastructure, will face thorough scrutiny. There will be no automatic approvals or shortcuts, even in a shifting political environment.
This doesn’t necessarily signal a tougher stance than before, nor does it imply that the jurisdictions that didn’t sign will be more lenient. However, the statement highlights a critical reality: 4-to-3 mergers, remain controversial and may face resistance depending on the country. In other words, most of these mergers would go to a phase II merger review.
The Netherlands, Austria, and Ireland have already approved 4-to-3 mergers in recent years, while Portugal notably blocked a similar move in 2024. Their recent experiences give them a deep understanding of local market dynamics, making them well-positioned to assess whether further consolidation is feasible.
Companies Considering M&A
Telefónica
The Spanish telecom giant is arguably the most vocal and proactive when it comes to pushing for consolidation—both domestically and across Europe. Its new CEO has repeatedly called for a more flexible regulatory framework to enable in-market and regional mergers. At the same time, Telefónica has been streamlining its international footprint by divesting major assets in Latin America, including exits from Argentina, Peru, Colombia, and soon Mexico, retaining only its strategic stake in Brazil.
These divestments are part of a broader strategy to reduce debt, increase liquidity, and refocus efforts on the European market. In Spain, Telefónica’s dominant position limits its acquisition options to smaller regional players. However, the company could make more ambitious moves elsewhere—such as expanding its footprint in Germany, where it owns the O2 brand, or in the UK, where it operates a 50-50 joint venture with Liberty Global. A potential buyout of Liberty’s stake could give Telefónica full control and open new avenues for growth in the (more profitable) British market.
Telecom Italia (TIM)
TIM has made no secret of its interest in leading market consolidation at home. In February, CEO Pietro Labriola named Iliad and Poste Italiane as attractive merger or acquisition targets. By April, rumors began to circulate about a potential tie-up between TIM and Iliad (part-owned by Vivendi), which could reduce the number of mobile network operators in Italy from four to three, after Vodafone sold its Italian business to Swisscom. Poste Italiane—one of TIM’s key shareholders—has signaled openness to a three-way collaboration involving TIM and Iliad, raising the possibility of a significant shake-up in the Italian market.
Digi
Digi has been aggressively expanding its footprint in Europe. After acquiring assets divested from the Orange–MásMóvil merger in Spain and purchasing Nowo in Portugal, Digi appears to be maintaining its acquisition momentum. In Romania, Digi and Vodafone are currently working with the national competition authority to clear a proposed joint venture that would reduce the number of players from four to three.
Belgium could be another market to watch: Digi may either seek expansion or become a potential acquisition target itself—possibly for players like Orange, which has been actively strengthening its position in the region.
In Portugal, however, any collaboration or acquisition seems less likely. The Portuguese competition authority blocked Vodafone’s attempt to acquire Nowo in 2024, casting doubt on the prospects for any Digi–Vodafone collaboration there.
Orange
The French telecom giant has kept a relatively low profile regarding future M&A moves, especially following the completion of its high-profile joint venture with MásMóvil in Spain. With that deal closed, Orange’s focus is expected to shift toward France and Belgium.
In France, Orange holds a dominant position, making any domestic acquisition challenging. However, Belgium is emerging as a potential M&A target, where Orange already operates Orange Belgium and recently acquired a majority stake in VOO, strengthening its fixed-line and broadband offerings. Collaboration or even acquisition of Digi Belgium could be an option, but the recent joint statement from the competition authorities makes it clear that such a move would face close regulatory scrutiny.
Vodafone
Following the CMA’s approval of the Vodafone–Three merger, the British telecom giant is expected to focus on executing and integrating that deal, rather than pursuing new acquisitions in the immediate term.
Recent divestments in Spain and Italy—worth a combined €12 billion—have significantly boosted Vodafone’s liquidity. These funds may be used to strengthen core markets or invest in digital infrastructure, but further M&A activity is likely to be selective and carefully evaluated.
Portugal appears off the table for now, after the country’s competition authority blocked Vodafone’s bid to acquire NOWO in 2024. Similarly, the Czech Republic has signaled it would not easily approve mergers involving key infrastructure players, adding another regulatory hurdle.
That leaves Germany, Vodafone’s largest European market, and Eastern European countries—where it has already acquired Liberty Global’s assets—as potential areas for strategic reinvestment or selective consolidation.
