Saturday, 30 May 2020

American merger concluded, DT looks closer to home for next move

by Harry Baldock, Total Telecom
Friday 03 April 20

After breathing a sigh of relief over the Sprint–T-Mobile merger, the German operator now has its eyes on home markets

The long-awaited T-Mobile–Sprint merger was finally completed on Thursday, leaving Deutsche Telekom free to turn its gaze home again.   Now, speaking to Bloomberg after the merger’s completion, Deutsche Telekom CEO Tim Hoettges said that the European market could do with some consolidation of its own.   “Europe is too fragmented…

The long-awaited T-Mobile–Sprint merger was finally completed on Thursday, leaving Deutsche Telekom free to turn its gaze home again.
 
Now, speaking to Bloomberg after the merger’s completion, Deutsche Telekom CEO Tim Hoettges said that the European market could do with some consolidation of its own.
 
“Europe is too fragmented,” he said. "Wherever I see a deal or an opportunity for European market consolidation that's convincing, then I would always look at that with the partners."
 
Hoettges argues that having so many players, each vying for a piece of the pie, is leading to the sector missing out on a wide variety of synergies that could benefit both both customers and companies; indeed, this is what the Sprint–T-Mobile merger is hoping to achieve, expected to generate $43 billion in synergies.
 
However, consolidation in Europe is not easy, with antitrust measures arguably more strict than those of the US. Hoettges suggests the regulatory bodies will have to loosen their grip on the industry to better facilitate consolidation if they want to see the industry flourish. Making them do so will be one of Hoettges’ next missions. 
 
“I will work with verve on changing the regulatory and antitrust-law framework,” he said.
 
Particularly with the ongoing coronavirus pandemic, broad-scale changes to European anti-trust law seem quite a tall order. Many European countries are already playing a three-player game when it comes to operators, and regulators are unlikely to ever sanction a consolidation into just two players. 
 
Deutsche Telekom is also somewhat limited by its powerful and wide-reaching position, meaning it will come under particular scrutiny by the lawmakers. One potential domestic deal that Deutsche Telekom would presumably quite like to make is to acquire the rapidly-growing fibre broadband company Deutsche Glasfaser, for example, though this would likely be heavily scrutinised by regulators. 
 
Thus, Deutsche Telekom’s most promising regions for mergers appear to be Hungary, Poland, Romania, and Slovakia – countries which have enough players to reasonably consider consolidation and in which Deutsche Telekom is not an overwhelming presence. In all of these countries, 5G is still in its relative infancy, so there is plenty of opportunity for rapid growth.
 
The coronavirus will of course slow any merger negotiations, but it will be interesting to see if this year will produce any opening back-and-forth regarding European consoldiation. 
 
 
Also in the news:

Since you're here...

...the Telecoms industry is characterised by constant change and evolution. That's why it's crucial for telecoms professionals to keep up-to-date with what is happening. Join 35,000+ of your peers and sign up to our free newsletter service today, to be in the know about what is going on. PLUS, as a member you can submit your own press releases!

See all membership options

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry