From Breakingviews - There’s hope beyond moaning for European telcos
The complex debate is only starting, with a ”consultation” launched by the European Union commission, whose member Thierry Breton professes to beon the contentious issue. The dispute is pitting David versus Goliath. The five U.S. companies targeted for contribution have a combined market capitalisation of more than $5 trillion - 21 times that of the five largest European telecom groups together.
Regulators are opposed to the idea, as already are some governments, such as the Netherlands. And there is no consensus on the form fair-sharing would take. A tax would be neither practical nor popular, but the alternative - wholesale commercial agreements - risks playing fast and loose with the concept of internet neutrality. In any case it will take years before European operators see hypothetical Big Tech payments contribute to their top line, one telco CEO privately acknowledged.
Meanwhile investors are yet to see the full proceeds of the 600 billion euros invested in networks in the past decade, according to a PwC estimate quoted by Heydemann, with consumers intending to pay less for ever more services. And they fret at the billions that must now be spent as the transition to 5G accelerates, withThe hope is now that, considering the European telcos’ low return on investment, European competition authorities will review their strict stance on consolidation in the sector.
Breton said he wanted a “serious discussion about the possible existing obstacles” to cross-border deals. That comes as another sign that after two consecutive crises, and the need to focus on technological sovereignty, the European Commission has softened its approach to competition issues. The single European market still doesn’t exist in the telecoms industry, with three or four operators in each of its 27 member countries. That compares to three in the U.S.
The eventual loosening of the EU’s stringent competition standard, which the most optimistic telco CEOs see happening, should be tested this year with decisions on Orange’s merger with KKR’s
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