Telefonica Pushes for Scale as Europe Rethinks Telecom Rules

By: Zenia Pearl V. Nicolas Europe’s mobile industry is crowded. In 2024, more than 40 operators each served at least half a million customers. In the United States, only five players dominate. China and Japan each have four, and South Korea has three. That difference, Telefonica’s new chief executive Marc Murtra argues, leaves Europe struggling to fund the next wave of technologies such as AI and 5G. Murtra, who stepped in as executive chairman in January after running Spain’s Indra, says the industry cannot remain so fragmented. “If Europe wants strategic autonomy and technology, we’re going to have to have large European technology operators,” he told Reuters.

Divesting in Latin America, Buying in Europe

Telefonica is selling units in Argentina and Uruguay and may offload businesses in Chile, Mexico and Ecuador. Analysts at Kepler estimate those moves could free up as much as €3.6 billion for acquisitions. The group has looked at Vodafone Spain, Germany’s 1&1, and even a larger stake in Virgin Media O2. Sources say Brazil also remains a priority market. Telefonica has not confirmed any specific targets.

Regulators Under Pressure

For years, EU regulators blocked mergers on the grounds that fewer operators would hurt consumers. That stance may be softening. The Vodafone–Three UK deal, approved earlier this year with conditions to protect rural coverage and network quality, suggests Brussels could be more flexible. Moody’s analyst Carlos Winzer sees the logic. “The regulators gain strategic investments and improvement in the quality of the networks, and on the other side, operators gain scale, which is absolutely fundamental in this industry,” he said. Still, obstacles remain. The EU’s Foreign Subsidies Regulation requires extra scrutiny of deals involving outside capital. Antitrust concerns are never far from the surface. Critics warn consolidation may limit choice and raise prices.

A High-Stakes Bet

Telefonica’s shares have bounced since Murtra took over, but the company is still half the size it was a decade ago and remains one of Europe’s most shorted stocks. Selling off Latin American units could buy time, but the bigger bet is that Europe is ready to allow a wave of tie-ups. Some bankers expect consolidation within individual countries first, followed by cross-border deals. If Telefonica succeeds, rivals like Orange, Deutsche Telekom and BT may follow. If not, the region risks remaining stuck with too many operators, all too small to compete globally.

Sources

• Andres Gonzalez, , “Telefonica looks to M&A to give European telecoms broader vision,” September 8, 2025. 

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• , “Telefonica’s Strategic M&A Push: Can European Telecoms Consolidation Unlock Value and Scale?” September 2025.

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