Content area
Full text
Abstract
Purpose - In recent times there has been much speculation about the need for consolidation in the European telecommunications industry. However, consolidation has not happened as expected with the market fragmenting instead. This article seeks to explain this phenomenon.
Design/methodology/approach - A distinction is made between second and third generation mobile technologies, and the ownership of mobile licences in 41 European countries identified. The ownership footprints of mobile operators are mapped, with patterns of consolidation and fragmentation commented upon.
Findings - The results show that, although many mobile operators have been intent on building empires both within and outside Europe, almost all of these operators have been forced to curtail their ambitions. As a consequence, consolidation has not occurred as expected.
Originality/value - It was widely anticipated that mobile operators would use third generation licensing to expand their footprints into new markets. This paper, however, argues that this has not happened and the European market has instead fragmented.
Keywords Telecommunication services, Mobile communication systems, Europe
Paper type Technical paper
Introduction
Periodically, in almost every industrial sector in Europe, rumours begin to fly about the need for consolidation. This is to be expected since the bringing together of relatively small-scale operations in individual nation states should in theory produce significant economies of scale and scope. In practice there are many barriers to consolidation, whether political, economic or social, and it may never take place at all or may involve somewhat unlikely partners, but this does not detract from its desirability per se. In contrast, the case for fragmentation is heard much less frequently, and even then most often in relation to conglomerates involving companies operating in several different sectors which no longer serve their original purpose.
One outcome that is most unusual in practice is where there is almost universal advocacy of consolidation but the end result is fragmentation, yet that is in essence what has been happening in recent months in relation to the mobile telecommunications sector in Europe. On the face of it, the telecommunications industry is a classic case of potential gains from consolidation, irrespective of whether it is the fixed-wire, mobile or Internet aspects that are under consideration. A Europe where there are different incumbents in every nation state, and...