“We are evaluating a series of options for Italy – says Vodafone CEO Margherita Della Valle – The market is challenging, but the situation is very different from the Spanish one”. Vodafone could therefore sell its activities in our country which yield little due to the very high competition between operators. There are two operators in the window, such as Iliad and Fastweb (controlled by Swisscom), who see their customer base growing and their accounts in order also thanks to a low number of employees, unlike the major managers.
Vodafone presented its half-year accounts which saw a return to growth in Germany, its largest market. In Italy, revenues from services in the six months amounted to 2.098 billion, down by 1.3% but with an improving trend. The British telecommunications giant is among the most active in terms of mergers and sales. In fact, it announced the sale of its operations in Spain and the merger of its division in Great Britain with Three of China’s Hutchison last June.
The European case
The paradox of telecommunications in Europe, a market worth 300 billion euros, is the great difficulty in growing the sector which over the years has been much targeted by EU regulators who have favored competition. The result of low European telecommunications tariffs in comparison with those of the United States is that a number of infrastructure managers struggle to keep up with investments. Moreover, from a consultation by the EU Commission on the future of networks it emerged that “too many regulatory loopholes and the lack of harmonization in force in the EU prevent TLC companies from concluding cross-border mergers and thus create players strong enough to compete globally”.
And therefore while the great Oct, that is from Google, Facebook, Amazon have become global giants thanks to the use of digital highways, i.e. the telecommunications networks, the companies that manage them are unable to get the right remuneration. For this reason, a large group of so-called “incumbents”, i.e. the former monopolists including Telecom Italia, had proposed to the EU to have a contribution from the OTT to finance the development of the networks.
But the “Fair Share” proposal, i.e. sharing investments, was rejected. The problem was moved to 2025 when the EU will develop a new “Digital Network act”. However, the situation is so clear that EU Commissioner Thierry Breton recognized that “telecommunications operators need greater size and agility to adapt to this technological revolution, but the fragmentation of the market is holding them back”.
Consolidation is conditioned by overly stringent rules
So perhaps it would be better, before consolidation, to change the rules. In fact, Italy is an example of how mergers between operators can do a lot of good for the competition, and therefore for users, but very bad for the operators operating in that market. The case is that of the merger between Wind and Tre which, due to the “remedies” requested by the EU to approve the merger, brought a fourth operator, Iliad, to Italy, which led to a vertical lowering of mobile telephony tariffs.
And therefore also the recent operation decided by Tim’s board of directors to spin off the network which should lead, in the government’s wishes, to the creation of a single network with Open Fiber could also lead to the creation of another network operator. In fact, among the “remedies” requested by the various Italian and European Antitrust authorities, there could be that of separating some sectors of the network into black areas, i.e. the most profitable ones. And even in this case there could be Fastweb at the window, which already has a valid fiber optic network.