European telecoms deals produce new winners as consolidation enters next phase
By Leila Abboud
PARIS Jan 23 (Reuters) - A frenzy of deals is shifting the competitive landscape among European telecoms operators, producing new winners such as Hutchison and Altice and setting the stage for more industry consolidation at home and overseas.
The deals are also testing European regulators' newfound openness to consolidation even at the risk of higher prices for consumers. European Commission President Jean-Claude Juncker and German Chancellor Angela Merkel have called for lighter regulation to encourage telecoms firms to step up investments in faster networks and help revive the region's stagnant economy.
Hutchison's move on Friday to buy Telefonica's UK O2 unit for 10.25 billion pounds ($15.4 billion) to create Britain's biggest mobile market player came only hours after Portugal Telecom SGPS's shareholders cleared the sale to Altice of PT Portugal, the national telecoms operator, for 7.4 billion euros.
Bankers predict that both groups will go on to lead the next phase of industry consolidation in Europe, with Hutchison aiming next for Vimpelcom's Wind in Italy and some Nordic businesses. Franco-Israeli billionaire Patrick Drahi's Altice will push French subsidiary Numericable SFR towards acquiring smaller rival Bouygues Telecom.
"There is a window of opportunity for more deals because of the lenient credit environment and more favourable stance of European Union regulators towards consolidation as they try to spark network investments and growth," said one sector banker.
A person close to the Hutchison deal, said: "The floodgates have opened on European consolidation."
The arrival of Hutchison and Altice in the big league in Europe after long being unprofitable small players is a major shift. Meanwhile former state-owned monopolies like Telefonica and France's Orange have been selling assets to cut debt and focus on fewer countries.
Thirteen M&A transactions have taken place involving Europe's telecoms and cable companies since January 2013, as companies seek scale to combat falling prices. Continuación...