There was a time not too distant, although it is situated in the prehistory of telecommunications, in which each country had only one phone company. In the last two decades of the last century, with mobile and Internet still stuttering after birth, there was a wave of liberalization and privatization that ended with the hated monopolies. To paraphrase the biblical axiom was not good for man to be alone against the almighty telephone flag. It was said that competition was the best weapon to improve service quality and lower prices. As usual, America was at the forefront. In 1974 the almighty decree divided AT & T into seven regional companies (so-called baby bells). Europe would soon follow suit.
The end of national monopolies (like Telefonica in Spain) was the birth of hundreds of companies. Finally, consumers had reached the promised paradise of competition, the free market orchard, with dozens of offerings to choose. But also, as in the biblical story, the devil is not resigned to sit still when it comes to ending havens. So for several years, and more intensely since the outbreak of the crisis, a wave of mergers and concentrations is shaking up the telecommunications sector.
The theory now is that competition is beneficial, yes, but to some extent.And the main argument for these concentrations (euphemistically called consolidation processes) is that the development of Internet and mobile, with a consumption of data traffic and exponential growth year after year, requires a huge investment so it is necessary to go back : few very large operators. But with the addition, and that differentiates you from the time of the monopolies, at the same time requires a process of deregulation: that authorities and regulators to intervene as little as possible.
In this process, the U.S. also tops. Four giants (AT & T, Verizon, Sprint and T-Mobile) make up the huge U.S. market. There could be less if the Obama administration had not slowed in 2011 attempted to absorb AT & T to T-Mobile USA, a subsidiary of Deutsche Telekom.
There are 300 European mobile companies, compared to 9 in the U.S. and 3 in China
Verizon, who leads the mobile phone in the U.S., has closed this week with Vodafone to buy its 45% stake in Verizon Wireless, its mobile subsidiary, for EUR 100,000 million, echoing the era of the tech bubble. It is the third largest acquisition in corporate history after buying Germany's Mannesmann by Vodafone (year 2000) and the AOL Time Warner (2001), which were conducted in full bubble. In July, Japan's SoftBank completed the acquisition of 78% of Sprint by 21,600 million.
The North American market moves. But the local playground has been outgrown and want to shop at Old Continent. The brokerage houses, investment funds and managers of the operators say that Europe is lagging behind in the field of information technology, the victim of a fragmented market in small domestic smallholdings, with multiple and stringent regulations that do not allow return on investment and impeding further step towards the new digital society that make Americans and Asians.
José María Álvarez-Pallete, CEO of Telefónica, is convinced that the European industry is missing the boat and must become more competitive. "Despite the large increase in traffic in recent years, Europe is the only region whose operators do not grow in revenue," the second Spanish multinational executive, who draws attention to the fact that in Europe there 339 mobile operators compared to nine in the United States or all three of China. He also complains coexist 27 eurozone regulatory frameworks for only one that governs the industry both in the U.S. or in the Asian giant.
The solution aims is that of a "digital single market" Europe with which to face the American challenge, but the bureaucratic machinery of Brussels and the EU states themselves do not venture to come to fruition the project. "O no single market or we will not be anything in the digital world", said Industry Minister Jose Manuel Soria, in the XXVII Meeting of Telecommunications, which was held this week in Santander.
Brussels wants
a digital single market and to
the 'roaming'
Jean Marc-Vignolles, CEO of Orange Spain, supports the theory that the telecommunications industry in Europe is "cornered" between two fronts: "A European regulation overly protective of the consumer", which translates into a constant pressure on the margins of the companies, and a huge investment needs to meet growing demand.
Vignolles argues that "consolidation is still an unresolved" because European operators are weakening. The two major U.S. carriers together (AT & T and Verizon) generated in 2012 more results (EBITDA) that the sum of the five major European operators (Telefónica, Vodafone, Orange, Deutsche Telekom and Telecom Italia). "The contributions of European operators are under severe pressure and they are becoming takeover target by other foreign operators," warns Vignolles.
It refers to operations such as takeover bid recently launched by America Movil, owned by Mexican tycoon Carlos Slim, on the Dutch KPN. Although the next landings could be much more spectacular. The Anglo-Saxon financial press has not stopped feeding the rumors (or maybe more) of the intention to AT & T to take over some of the greats of Europe. The most notorious was the interest in Telefónica. An interview with the CEO of AT & T Industry Minister sparked speculation. In June, there was talk of a takeover imminent U.S. by 70.000 million euros, which would also assume debt of 50,000 million from the Spanish. Both Telefónica and the Government were quick to deny the bid. Although more cautious when Bloomberg, citing sources familiar with the operation, explained days after the AT & T plans were more modest: to capture 29.9% of Telefónica to not have to launch a takeover bid well for the entire capital.
European operators are trying to defend from these threats gaining size.Vodafone, which has had offers from AT & T by one of its European assets, bought in June the largest cable operator in Germany, Kabel Deutschland, for 7,700 million euros. Telefónica has launched a bid of 8,550 million E-Plus, KPN subsidiary cell. They are timid attempts, colliding with the zeal of national and EU regulators, even when it comes to infrastructure sharing. The changes made France Telecom and Deutsche Telekom unifying a joint venture (Everything Everywhere) their British operators may be the way.
There are many companies opables its low share price
The Competition Commissioner, Joaquin Almunia, is defended: Brussels is not particularly strict on the regulatory front. The proof, he says, is that since 1990 began to exercise merger control has never vetoed a cable operation on mobile, only merely imposed conditions. Almunia also denies that the Commission has an unwritten rule that prevents a country has less than four operators.
"In Europe there are countries with less than four. We have authorized a merger that left three in Austria and Holland. We do not have a dogmatic about the number. While it is true that the duopoly is not acceptable, "he said this week in an interview with Cinco Dias.
Equipment manufacturers are in a situation even more complicated, France's Alcatel Lucent continues to cut jobs in Europe while Nokia Siemens has cut 20,000 jobs worldwide in the past two years, and is studying 8,500 additional layoffs. Although Nokia has put icing, the former leader of the mobile manufacturers, whose cell division has been bought by Microsoft this week.
"It would have been unthinkable surgery eight years ago. But today is considered credible any news to talk about shopping in Europe by American operators, but not vice versa, due to the weak market of European companies affected by falling income, "says Francisco Roman, president of Vodafone Spain.
Jazztel, Telstra and Ono, in the sight
The Spanish market is a typical model of fragmentation. The wholesale price regulation by the Telecommunications Market Commission (CMT) has led to a growing segment of resellers, which has proved very profitable in the mobile and fixed inefficient in traditional broadband. In the heat of those priced prices have emerged since 2006 nearly 30 mobile virtual network operators (MVNO) that in a few years have made with 8.3% market share by revenue. The trend is unstoppable: customers who lose month to month with network companies will stop the OMV. The proper functioning of portability, which allows free switching companies retaining the number, facilitates the transfer. Since early 2011, Movistar and Vodafone have lost 3.5 million customers due to portability.
In fixed broadband has proved very inefficient rental model, so the five major operators with their own network (Telefónica, Ono, Jazztel, Vodafone and Orange) make up the residential market, they share in their respective areas with the regional cable operators (Euskaltel, R and Telecable).
With a market so divided there is some way for the consolidation. Assuming that the regulator would make it impossible any operation between the three large-Telefónica, Vodafone and Orange, the two most desirable snacks are Telstra and Jazztel, alternative leaders in mobile and broadband respectively.For the fourth mobile operator and openly expressed interest Orange this spring, but did not cover the bid marked by its parent company TeliaSonera.From Jazztel has spoken of his sales almost from the moment he took the reins of the company Leopoldo Fernández Pujals, the architect of Telepizza pitch. Since early 2012, its price has almost doubled. Worth 1,840 million euros. It is the mystery of Ono. The four venture capital funds seized most of the capital of the cable companies when they bought in 2005 are looking forward Auna your investment. But have not found a buyer. His intention is to look for an alternative in the IPO, which again insisting this week its CEO, Rosalia Portela.
The source of liquidity has provided Vodafone's sale of its stake in Verizon has sparked all sorts of rumors and combinations. Especially when the CEO of the company in Spain, Antonio Coimbra, in a meeting with reporters, said this week that Spain is one of the five countries in which the group will invest part of the 7,100 million euro from Verizon Wireless.
An opinion even more critical is the undersigned Jose Antonio Lopez, CEO of Ericsson Spain, whose company competes heavily with the Chinese Huawei and ZTE for the laying of new fiber and 4G networks across Europe. "If we do not grow organically and inorganically lose European companies. And we must help regulators. We must improve profitability and grow to keep us buying. Because, as is the capitalization, there are real bargains in Europe for companies in the U.S. and Asia. "
But not only endangered the Europeanness of companies. This dispersion and the regulatory environment are causing, according to operators and manufacturers, a technology gap. Verizon covers 95% of the U.S. population with 4G, while 100% of the South Korean population already enjoys access to this technology.
Vodafone can go shopping
Verizon's money
Arnica ask companies to regulators.The obsession of all is the digital single market Soria speaking. The bearer of this utopia is Neelie Kroes, Commissioner for the Digital Agenda, which states that it is aware that "operators can not achieve economies of scale, think Europe as a whole and compete globally."
His idea is to create a European digital passport with which operators can market their services in any EU country without having to go through national bureaucracies. But Kroes has other plans that do not have the sympathy of the operators. As throughout the EU to end the roaming fee that companies charge when customers call or receive calls from other EU countries who brings great benefits. Commissioner them cites the U.S. market where revenues from subscription services bend to those of the EU, although the cost of calls is three times lower than the European average.
When the big corporate consumers interested in the extent that they affect your bill. And yet been shown to be beneficial to oligopoly pocket.If the model is going to be the energy, where three or four companies share the Spanish market, which they are prepared. According to Eurostat, the prices of electricity and gas for 2012 individuals were 75% and 30% higher, respectively, than in 2007. In that period, in the fragmented mobile market rates have fallen by 33%. Beware consolidations.
