Telco M&A and consolidation on the horizon for Europe: Report

• Bloomberg Intelligence team has taken a look at the European telco sector
• Valuations have been squeezed and 5G costs are weighing heavy
• But private equity and infrastructure fund interest is still much in evidence
• And 2021 could see further attempts at telco consolidations

It’s hard, as we know, to predict anything currently, but the team at Bloomberg Intelligence have cast their gaze at Europe’s telcos and come to the conclusion that M&A activity in the sector could ramp in 2021, driven by ongoing private equity and infrastructure fund interest and the perennial push for service provider consolidation.

In a new report, titled Europe Telecommunications 2021 Outlook, the Bloomberg Intelligence team notes that the arrival of Covid-19 vaccines could herald a return to more regular activities that will boost telco revenues from roaming, handset sales and value-added services, such as those related to sports content. 

With spirits and outlooks improved, some operators may have another run at consolidation and “test the resolve of regulators in the aftermath of the pandemic,” with Spain and Sweden tipped to be at the front of that particular queue

In Sweden, Three is regarded as being a primary target for acquisition by either Telenor or Tele2 and a bidding war might well result. 

In Spain, where there are five competing companies in a crowded market, M&A activity was expected to pick up there over this year before the coronavirus struck – once it’s on the wane the expectation is that market consolidation will follow. Analysts point to the recent joint venture between Masmovil and Vodafone as a bellwether of a coming trend. 

Meanwhile, in Italy, consolidation may well happen in the access network sector, with TIM ready for the long-discussed marriage of its fixed broadband unit with Open Fiber. 

And don't let's forget that network operators may well see partnerships, joint ventures and stake sales as a comparatively easy and moderately inexpensive route to help fund infrastructure initiatives.

A direct link to the Bloomberg Intelligence (BI) report is not available to share, but information at BI services can be found at the Bloomberg Intelligence website.