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Consolidation looms as European telcos refocus their strategies

The sale is the latest in an ongoing string of deals being made by Telefonica as it shifts its strategic focus to concentrate more on its core European market and on developing its presence in South America.

In a statement Telefonica says it is "continuing to execute its strategy of focusing on our core markets and optimising financial flexibility, together with the sale of Telefónica Ireland earlier this year, plus the acquisition of E-Plus in Germany, the strategic move we have just announced in the Czech Republic is further evidence of the market lead we retain in driving consolidation in Europe. Telefónica is leaving the Czech market to focus on our largest European markets".

Meanwhile, the French mass media and telecoms multinational Vivendi is selling 53 per cent of its holding in Maroc Telecom of Morocco to Etisalat, the incumbent telco of the United Arab Emirates, for €4.2 billion.

The moves are two more straws in the wind of change that is blowing ever more strongly across the European telecoms landscape. The likes of Deutsche Telekom, PT (Portugal Telecom as was) Orange, Telecom Italia, Vodafone and others are ridding themselves of secondary assets as they focus on playing to their strengths in selected overseas markets where they have the biggest and most significant presence and as they face even more cut-throat competition and regulatory intervention in their home European markets.

Consolidation looms over those smaller, Tier 2 European service providers without the market clout or financial wherewithal to invest in '4G' infrastructure and services.

Acquisition, and disposals are likely to accelerate in 2014 as European mobile carriers leave smaller markets and buy-up cable operators and OTT players that can provide them with new revenues streams in a viciously competitive market.

As Adrian Baschnonga, a telecoms analyst with Ernst & Young in London observes, “The European telecoms industry is about the survival of the fittest. Everybody is expecting some form of consolidation.”

Meanwhile, AT&T of the US and America Movil of Mexico are looking for keenly priced acquisitions in Europe as change sweeps away the old order.

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