In This Article:
(Updates throughout after Swisscom-Vodafone deal)
By Supantha Mukherjee and Olivier Sorgho
STOCKHOLM, March 15 (Reuters) - Swisscom's agreement to buy Vodafone Italia for 8 billion euros ($8.7 billion) is the latest attempt by a European telecom company to boost its prospects through consolidation, divesting assets, or selling stakes to investors.
Weighed down by billions of euros of debt, European telecom companies operate in small, highly competitive markets, unlike their peers in other regions, making it difficult for them to find growth.
The following outlines their limited options.
CONSOLIDATION
European telcos have for years fought regulatory hurdles that prevent mergers.
Many countries have four mobile operators jostling for share in small markets, which usually equates to lower prices for consumers but less profit for the companies, analysts say.
Mergers would reduce the number of operators, and regulators are concerned that could lead to higher prices, less choice and lower quality for consumers, particularly if two local players join forces in one market.
The Swisscom and Vodafone deal would create Italy's second-biggest fixed-line broadband operator behind Telecom Italia (TIM).
Bouygues Telecom, a unit of French conglomerate Bouygues , last month signed an exclusivity agreement with La Poste to buy its telecoms unit for 950 million euros ($1.03 billion). If finalised, the deal would reduce competition in the French market.
Earlier this week, Spain's government authorised an 18.6 billion euro merger between French mobile operator Orange's Spanish business and its rival MasMovil.
The deal, which received EU antitrust clearance in February, has been viewed in the sector as a test case of whether Europe's antitrust regulators have become more lenient in approving deals that reduce the number of operators.
Analyst Paolo Pescatore at PP Foresight told Reuters they arguably had not. He said the complementary nature of both businesses meant Swisscom-Vodafone had a greater chance of getting clearance, while the Orange-Masmovil deal was only approved on the condition that a stronger player would emerge in the mobile network market.
Britain's antitrust watchdog in January launched an investigation into the $19 billion merger between Vodafone's UK operation and CK Hutchison's. It is due to provide an update later in March.
SELLING ASSETS
In the last few years, telecom firms have sold non-core assets such as mobile tower businesses to raise cash.
American Tower and Cellnex spent billions of dollars in buying up the mobile masts. Spain's Telefonica received 7.7 billion euros for selling its towers business.