Introduction:
During a recent GSMA Intelligence (GSMAi) webinar, key developments in the 2025 telecom sector were identified. They include satellite communications expansion/partnerships, eSIM proliferation, and industry consolidation.
Projections for 2026 suggest that 6G evolution (in 3GPP and ITU-R WP 5D) and artificial intelligence (AI) will have the greatest impact within the telecom space.
Mergers & Acquisitions:
Radhika Gupta, GSMAi’s Head of Data Acquisition, asserted that 2025 marked a pivotal shift, signaling that “ice finally broke on consolidation” within the telecommunications sector. The completion of the Vodafone UK and Three UK merger is cited as primary evidence, reducing the UK market from four major competitors to three.
“This particular event is important because Europe historically had been very particular about not approving such mergers that shrink a market from four players to three players for competition reasons. Even in the UK, back in 2016, Three and O2 [now Virgin Media O2] attempted to merge, which was not approved by the European Commission on competition reasons only.”
The significance of this event lies in the regulatory approval, which sets a new precedent. Historically, European bodies resisted mergers that concentrated market power. The European Commission previously blocked a similar UK merger attempt between Three and O2 in 2016.
The approval of the VodafoneThree entity signals a strategic shift among European and UK regulators. The UK’s Competition and Markets Authority (CMA) cleared the deal subject to critical remedies rather than structural prohibitions:
- A mandatory £11bn joint network investment plan over eight years for infrastructure upgrades.
- Capped consumer tariffs for three years to mitigate price escalation.
- Pre-set wholesale prices for three years, ensuring fair access for Mobile Virtual Network Operators (MVNOs).
Gupta notes that this focus on legally binding operational and investment obligations, rather than outright rejection, suggests a regulatory acknowledgment that “some degree of consolidation is good” for fostering necessary large-scale infrastructure investments. This shift has prompted the EC to launch a consultation to formally review and potentially revise EU-wide merger guidelines, which could facilitate further M&A activity across Europe.
The Convergence of Terrestrial and Satellite Networks:
Tim Hatt, GSMAi’s Head of Research and Consulting, highlights the convergence between satellite and terrestrial communications as a key 2025 development. Recent actions by SpaceX and its LEO constellation, Starlink, underscore this trend. SpaceX’s acquisition of nearly $20bn in satellite spectrum from EchoStar is a strategic move to enhance its direct-to-device (D2D) offerings. The move “showed Musk’s intent,” but also could mark the direction for travel for future spectrum auctions and satellite connectivity in general, explained Hatt.
“While I don’t think we will see satellite providers overtaking terrestrial services, as some have speculated, it shows that direct-to-device is a formidable trend right now… operators representing almost 70% of [the global mobile] market share has at least one satellite partnership with companies like Starlink,” Hatt added.
Editor’s Note: AST SpaceMobile, Iridium and Skylo and other satellite network operators are also making similar partnerships with cellular network operators to offer direct-to-device (D2D) satellite connectivity. The use cases are emergency texting and future voice/data, aiming to eliminate mobile dead zones by connecting standard smartphones to LEO satellites. These collaborations leverage existing mobile networks and spectrum to provide ubiquitous coverage, with AT&T and Verizon focusing on AST SpaceMobile and T-Mobile partnering with Starlink for expanded services.
Image Credit: European Space Agency
Accelerating eSIM Adoption and OEM Strategy:
Apple’s integration of eSIM-only functionality has long-term industry ramifications. Pablo Iacopino, Head of Commercial Research at GSMAi, points to Chinese operators’ support for the Apple iPhone Air eSIM as a potential catalyst for global adoption. The Chinese market is a critical influence point for major OEMs such as Xiaomi, Oppo, and Huawei. If these manufacturers observe strong consumer adoption in China, they are expected to rapidly integrate eSIM functionality into their global product lines, including lower-cost segments, driving worldwide availability and adoption.
Looking ahead to 2026, Iacopino predicts this proliferation of eSIM devices will create opportunities for non-telco entities—such as fintech firms like Revolut and various airlines—to launch competitive eSIM travel offerings, leveraging wholesale access to provide connectivity services.
Sovereign AI in Telecom:
Artificial intelligence remains a dominant theme. Hatt predicts that by the end of 2026, 25% of telcos will have launched a sovereign AI service. The motivation is rooted in specific governmental compliance requirements for data residency and security. Operators are uniquely positioned to meet this need due to their status as national groups managing critical infrastructure. Examples of early movers include BT Group in the UK, and Bell Canada and Telus in Canada.
European Market Outlook: A Path to Growth:
Pau Castells, GSMAi’s Head of Economic Analysis, offers an optimistic forecast: European mobile operators are poised for revenue growth in 2026 after years of stagnation. The impetus for this recovery relies heavily on regulatory reform. Castells notes nascent signs of Average Revenue Per User (ARPU) growth in 2025, which could accelerate if European policymakers enact critical changes.
Key required reforms include the proposed Digital Networks Act, which aims to create a single regulatory framework for spectrum and cost-sharing, and updated merger guidelines that allow operators the necessary scale to compete effectively.
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