wireless telecom in the EU
Lack of wireless network operator consolidation & EU over-regulation weakened mobile network infrastructure investments
by John Strand of Strand Consult
Over-regulation in the European Union (EU) has had a negative impact on mobile network operator’s investment in both fixed and mobile infrastructure. Years ago, the EU identified a €100 billion investment gap in telecommunications. By 2025, this gap has reportedly doubled to €200 billion. Why did that happen?
The EU telecom market has a large number of operators, many of whom lack the subscriber base to generate sufficient returns on capital to justify large infrastructure investments. In contrast, countries like the US and China have a smaller number of larger operators, allowing for greater economies of scale and more investment per operator.
Regulatory Complexity and Costly Landscape: Overregulation and fragmented national rules create a complex and costly environment that stifles innovation and adds uncertainty for telecom companies, says the ECIPE. This impacts the ability to attract investment, according to the European Investment Bank.
Mobile operators around the world would like to merge four mobile networks in their respective nations into three. This would improve the business case for investment by eliminating duplicative administrations, improving spectrum synergies, and upgrading customers to better networks. Strand Consult has studied mobile industry consolidation since 2000 with the groundbreaking case of South Korea merging five operators into three and being first in the world to launch 3G. South Korea has remained at the forefront of mobile industry innovation, investment, and rollout ever since.
Unfortunately, during the period 2014 to 2024 European Union Vice President for Competition Margrethe Vestager had a crude view on in market consolidation. She did not understand that market consolidation could have a positive impact on the wireless infrastructure that citizens have access to.
The result is that this proceeding appears to overlook that critical lever—making it unlikely to achieve its core goal of boosting private-sector investment in broadband, fiber, and next-generation networks like 5G and 6G. While reducing compliance and reporting burdens is welcome, if the overarching regulatory model remains flawed, the fundamental barriers to investment will persist.
If you look at countries such as the United States, India and Brazil, the in-market consolidation has had a positive impact on the infrastructure to which citizens have access. Today, in a country like India, there is better 5G infrastructure than there is in large parts of Europe.
There is no requirement that EU Competition authorities justify their merger decisions empirically. Only occasionally are official post-mortems issued examining whether their decision was right. Generally, such reports conclude that prices remain low. However, in a world in which mobile prices are flat or falling anyway, a merger rejection is not needed to ensure competitive prices. Competing voice technologies like WhatsApp and Telegram drive down mobile prices, as do the competitive wireless offerings by fixed line providers.
Notably few, if any, competition authorities have studied how the length of merger review impacts network investment. When companies request permission to merge, it’s as if time stops. Operators must hold back on critical capital decisions while authorities assess the merger request.
In the United Kingdom, some analysts have blamed poor mobile coverage on new restrictions placed on Huawei and ZTE. This is nonsense. Operators across the EU have switched and upgraded to trusted equipment vendors without impacting coverage. See TDC Denmark, Telenor and Telia in Norway, T-Mobile in the Netherlands (Odido), and Proximus in Belgium.
The UK has had two recent mobile merger attempts: O2/Hutchison (2015-2016), which Vestager blocked in May 2016. The parties sued the Commission and won in 2020. However, the EC appealed and won in 2023. By that point, the issue was moot as the UK had left the Union. Most competition authorities don’t care that their review of transactions can take years, but markets do. Few companies can afford to tie up so much capital for so long, and fewer still can afford to challenge such decisions when they are unfavorable. Hence the Draghi report is on to something.
Vodafone and Hutchison have tried to merge since June 2023. Upon leaving the EU, UK merger decisions were restored to local authorities. The UK Competition and Markets Authority issued a favorable decision last year.
Slow merger review process is almost as bad as a merger rejection. Before firms announce a merger, they have done their internal due diligence, perhaps over 12-18 months. Once submitted, a merger review can take 12 to 24 months. If approved, the merger can take another 18 to 24 months to implement. This process can take from 36-66 months from start to finish. This period of planning, submission, review, merger, and implementation puts network investment on hold. The numbers speak for themselves just look at Ookla´s numbers for the UK.
T-Mobile – Sprint Merger:
In US, it’s a wonder that the merger of #3 T-Mobile and operator #4 Sprint happened at all. Depending on the asset and transfer, telecom merger review can include the Department of Justice, the Federal Communications Commission, the Attorneys General of the 50 states and other gatekeepers, all of whom want to extract concessions from the transaction. While there are fewer authorities in the case of Vodafone and Hutchison, it still takes time.
With the Sprint acquisition, T-Mobile wanted to create an operator to compete at scale with AT&T and Verizon. Today the merger is an unqualified success; customers have gained access to a better network, while T-Mobile today has grown the muscle to compete head on with AT&T and Verizon.
The military needs to get access to 5G SA:
In the telecommunications industry, there has been talk for many years about how mobile companies can gain access to new sources of revenue. 5G and not least 5G SA and 5G private networks have received a lot of attention. Conversely, there has not been much talk about what communication solutions the defense system needs in the future.
The war in Ukraine and shifting geopolitical realities have dramatically changed perspectives in recent years. There is now a fundamentally different understanding of why and how defense investments must be made. We live in a world in which Russia has invaded Ukraine; China counts Russia, North Korea, and Iran as allies; and these countries support Russia’s invasion of Ukraine
All countries across NATO are in the process of modernizing the defense systems, gigantic sums will be invested in new and advanced equipment. The shopping list is very long, on the other hand, all these new defense solutions have in common that they need access to modern communication solutions.
Modern militaries cannot function without secure, advanced, and integrated communications. 5G SA is the go-to solution for its speed, security, and adaptability. When it comes to the limited rollout of 5G SA in Europe, it has major implications for NATO´s access to access to a single national network free from untrusted vendors like Huawei and ZTE.
At the same time NATO does not use equipment from countries like China, Russia, North Korea, or Iran. Indeed, NATO’s procurement rules prohibit its contracting with communist countries. NATO would not purchase Chinese fighter jets from Chengdu Aircraft Corporation and Shenyang Aircraft Corporation, nor Huawei network equipment. The rationale is that ill-advised to acquire critical supplies from one’s adversary.
One of NATO´s key problems in Europe is a large number of operators have chosen to use equipment from suppliers like Huawei and ZTE there are unlikely to meet the security requirements from NATO. The qualification review and exercise which will be undertaken among the 32 NATO countries and many other nations around the world aligned with NATO, countries like Japan, the Philippines, and others. Countries which consider China a military partner (Pakistan, Belarus, and Cambodia) use Huawei and ZTE equipment.
The European Commission wants to transform telecom regulation in Europe:
The EU will have a public consultation regarding The Digital Networks Act (DNA). It is EU’s initiative to modernize telecom regulation by harmonizing rules, spurring infrastructure investment, and cutting red tape. It seeks to streamline spectrum licensing, network authorizations, and reporting across member states, while promoting sustainability and consumer protection. These are worthy aims—but past experience suggests the European Commission lacks the resolve, or the “DNA,” to turn vision into action. While Strand Consult supports the effort to bring telecom policy into the 21st century, the proposals arrive too little, too late to inspire investors, entrepreneurs, or citizens. Outside of standout digital performers like Denmark, Europe’s digital sector has long trailed the U.S., South Korea, Norway, and Switzerland by most competitive benchmarks.
At Strand Consult, we are concerned that the EU’s ongoing regulatory reforms will once again fail to address the fundamental challenges. Years ago, the EU identified a €100 billion investment gap in telecommunications. By 2025, this gap has reportedly doubled to €200 billion.
The EU’s record on AI is similarly illustrative. In 2018, the EU announced its ambition to lead in AI. However, by 2023, it had passed legislation that imposed significant constraints on AI development. In 2025, despite limited presence in the global AI landscape, the EU reiterated its ambition to lead, this time with an “AI Continent Action Plan.”
These historical examples suggest that the European Commission excels at producing regulations that slow technological development and deter investment. There are few—if any—notable technology firms that owe their success to EU regulatory frameworks. In contrast, we see a steady decline in key sectors like telecommunications and hardware, driven by regulatory missteps.
The European Commission has now pledged to transform telecom regulation in Europe. It may be too little, too late to address the deep-rooted challenges the EU itself has acknowledged and in part, created.
The bottom line is that The European figures from Ookla speak for themselves. The problem that they have uncovered is a problem that many of us have talked about a lot for many years.
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References:
Consolidation would renew European telecoms, says digital industry chief
https://www.eib.org/files/publications/thematic/accelerating_the_5g_transition_in_europe_en.pdf
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John Strand is the CEO of Strand Consult. He founded Strand Consult in 1995. Strand Consult is an independent telecom consultancy known for its expert knowledge and many reports which help mobile operators and their shareholders navigate an increasing complex world. It has 170 mobile operators from around the world on its client list.
