The great European transnational telecommunication companies are, for the present, approaching the end of their portfolio. Questions still remain about what will happen to a number of assets but the strategy contours are clearly there. It is striking to see how network sharing and working together have evolved into an important role, as seen with Deutsche Telekom and France Telecom. DT and FT have a network sharing deal in the UK and in Austria and have also set up a joint venture for purchasing equipment together (see our commentary, "Closer cooperation between Deutsche Telekom, France Telecom makes sense”)
A brief summary:
◦ Deutsche Telekom: sells T-Mobile USA (still pending), focus on Europe, particularly Eastern Europe. On the programme: the further strengthening of East European positions. But according to rumours, the Netherlands and Austria will also be strengthened: with “fixed” assets.
◦ France Telecom: focus on Europe, with special attention to the EMEA (Europe, Middle East and Africa). Still to do: further growth through acquisitions in the EMEA region. Belgium (Mobistar), Romania and Austria will undergo reviews (read: may go on sale).
◦ Vodafone: sale of minority interests and spread out on an international level. Still to sell: Polkomtel (with TeliaSonera as a candidate) and Bharti. See our commentary “Vodafone sells SFR but further acquisitions unlikely”.
o ◦ Tele2: focus on Scandinavia, the Baltic States, Croatia and Russia, together with assets in the Netherlands, Germany and Austria. See our Dutch commentary “Gaat Vogelpoel Tele2 in West-Europa versterken of verkopen?”.
◦ Telefónica: focus on Spain, Latin America and some European countries. A veiled allusion to a merger between O2 Germany and E-Plus could be inferred from the comment "LTE is a three-player market", see our commentary "KPN does not treat market to visionary strategy”.
◦ TeliaSonera: focus on Scandinavia, the Baltic states and south Asia.
◦ Liberty Global: the focus will go mainly to Europe. The German position is made up of two acquisitions. The acquisition of Ziggo in the Netherlands is the obvious next step. There is no lack of sales candidates, see our commentary "Where will Liberty Global strike next: Germany or the Netherlands?”. This would in theory release more than USD 4 billion.
In the short to medium term, all of the above means that there are probably more network sharing agreements in the works and that assets will still be going back and forth. It seems E-Plus and O2 Germany are doomed to come together, unless France Telecom makes a bid for E-Plus and then immediately goes for another network sharing deal with partner Deutsche Telekom. Tele2 will have no trouble finding candidates for its Western European assets (Netherlands, Germany, Austria). DT/T-Mobile and Vodafone will certainly check out this situation, although the question remains whether companies are prepared to grow via acquisitions. The focus on convergence (the combination of fixed and mobile assets) is growing. Vodafone currently outperforms the Dutch market (see our article "Vodafone NL shows how to rebalance with data-centric deals”), but has significantly fewer fixed assets than T-Mobile NL, which owns Online Broadband. T-Mobile NL is not standing still, as we have learned from sources within the company, which is busy working out a reorganisation plan. In short, consolidation will continue but who will lead this consolidation in Western Europe is not yet clear.
