The Deutsche Telekom pavilion at Mobile World Congress in Barcelona, Spain.
Angel Garcia | Bloomberg | Getty Images
BARCELONA — Europe’s telecommunication firms are ramping up calls for more industry consolidation to help the region compete more effectively with superpowers like the U.S. and China on key technologies like 5G and artificial intelligence.
Last week at the Mobile World Congress (MWC) trade show in Barcelona, CEOs of several telecoms firms called on regulators to make it easier for them to combine their operations with other businesses and reduce the overall number of carriers operating across the continent.
Currently, there are numerous telco players operating in multiple EU countries and non-EU members such as the U.K. However, telco chiefs told CNBC this situation is untenable, as they’re unable to compete effectively when it comes to price and network quality.
“If we’re going to invest in technology, in deep know-how, and bring drastic change, positive drastic change in Europe — like other large technological companies have done in the U.S. or we’re seeing today in China — we need scale,” Marc Murtra, CEO of Spanish telecoms giant Telefonica, told CNBC’s Karen Tso in an interview.
“To be able to get scale, we need to consolidate a fragmented market like the telecoms market in Europe,” Murtra added. “And for that, we need a regulation that allows us to consolidate. So what we do ask is: please unleash us. Let us gain scale. Let us invest in technology and bring upon productive change.”
Christel Heydemann, CEO of French carrier Orange, said that while some mega-deal activity is starting to gather pace in Europe, more needs to be done to guarantee the continent’s competitiveness on the world stage.
Last year, Orange closed a deal to merge its Spanish operations with local mobile network provider Masmovil. Meanwhile, more recently, the U.K.’s Competition and Markets Authority approved a £15 billion ($19 billion) merger between telecoms firms Vodafone and Three in the U.K., subject to certain conditions.
“We’ve been actively driving consolidation in Europe,” Orange’s Heydemann told CNBC. “We see things changing now. There’s still a lot of hope.”
However, she added: “I think there’s a lot of pressure in Europe from the business environment on our political leaders to get things to change. But really, things have not yet changed.”
During a fiery keynote address on Monday, the CEO of German telco Deutsche Telekom, Tim Höttges, said that other telco markets such as the U.S. and India have condensed in size to only a handful of players.
The American telco industry is dominated by its three largest mobile network operators, Verizon, AT&T and T-Mobile. T-Mobile is majority-owned by Deutsche Telekom.
A chart comparing the share price performance of T-Mobile, America’s largest telco by market cap, with that of Germany’s Deutsche Telekom and France’s Orange.
“We need a reform of the of the competition policy,” Höttges said onstage at MWC. “We have to be allowed to consolidate our activities.”
“There is no reason that every market has to operate with three or four operators,” he added. “We should build a European single market … because, if we cannot increase our consumer prices, if we cannot charge the over-the-top players, we have to get efficiencies out of the scale which we created.”
“Over-the-top” refers to media platforms such as Netflix that deliver content over the internet, bypassing traditional cable networks.
Europe’s competitiveness in focus
From AI to advances to next-generation 5G networks, Europe’s telecoms firms have been investing heavily into new technologies in a bid to move beyond the legacy model of laying down cables that enable internet connectivity — a business model that’s earned them the pejorative term “dumb pipes.”
However, this costly endeavor of modernization has happened in tandem with sluggish revenue growth and an inability for the sector to effectively monetize its networks to the same degree that technology giants have done with the emergence of mobile applications and, more recently, generative AI tools.
At MWC, many mobile network operators talked up their usage of AI to improve network quality, better serve their customers and gain market share from competitors.
Still, Europe’s telco bosses say they could be accelerating their digital transformation journeys if they were allowed to combine with other large multinational players.
“There’s this real focus now around European competitiveness,” Luke Kehoe, industry analyst for Europe at network intelligence firm Ookla, told CNBC on the sidelines of MWC last week. “There’s a goal to mobilize policy to improve telecoms networks.”
In January, the European Commission, the executive body of the European Union, issued its so-called “Competitiveness Compass” to EU lawmakers.
The document calls for, among other things, “revised guidelines for assessing mergers so that innovation, resilience and the investment intensity of competition in certain strategic sectors are given adequate weight in light of the European economy’s acute needs.”
It also calls for a new Digital Networks Act that would look to improve incentives for telcos to build next-generation mobile networks, reduce compliance costs, improve connectivity for end-users, and harmonize EU policy across the network spectrum, or the range of radio frequencies used for wireless communication.
“The common theme and the mood music is certainly reducing ex-ante regulation and to foster what they would call a more competitive environment which is an environment more conducive of consolidation,” Ookla’s Kehoe told CNBC. “Moving forward, I think that there will be more consolidation.”
However, the telco industry has some way to go toward seeing transformational cross-border mergers and acquisitions, Kehoe added.
For many telco industry analysts, the demands for increased consolidation is nothing new.
“European telco CEOs have never been shy about calling for consolidation and growth-friendly regulation,” Nik Willetts, CEO of the telco industry association TM Forum, told CNBC. “But regulation is only one piece of the puzzle.”
“In the last 12 months we’ve seen a new energy from our members in Europe to get on with the huge task to transform themselves: simplifying, modernizing and automating their operations and legacy tech.”
“This will make it possible to rapidly adapt to new customer needs and market realities, whether building new partnerships, undergoing M&A or delayering integrated businesses – all trends we expect to reach new heights over the next 24 months,” he added.
Check out the companies making the biggest moves midday: Petco Health — The retailer slumped 22% after losing 4 cents per share in the fiscal first quarter, twice the 2-cent loss that analysts had estimated, based on FactSet data. Revenue of $1.49 billion missed the Street’s $1.50 billion consensus, while same-store sales dropped 1.3%, worse than the 0.6% decline forecast by analysts. Tesla — The EV maker added more than 6%, a day after plunging 14% as CEO Elon Musk and President Donald Trump publicly feuded . Broadcom — Shares of the chipmaker dipped 2.7% on lackluster free cash flow for the second quarter. Broadcom reported free cash flow of $6.41 billion. Analysts surveyed by FactSet were looking for $6.98 billion. Still, several analysts covering the stock raised their price targets. ABM Industries — Shares fell 11% after the facilities management company reported mixed results for its second quarter. Its adjusted earnings of 86 per share was in line with expectations, while its revenue of $2.11 billion topped the FactSet consensus estimate of $2.06 billion. ABM Industries also reiterated its earnings guidance for the year. Circle Internet Group — The stablecoin company popped 38%, following its Thursday debut on the New York Stock Exchange. Circle soared 168% in its first day of trading . Lululemon — The athleisure company pulled back 20% after its second-quarter outlook missed analyst estimates. CFO Meghan Frank also said on a call that Lululemon plans on taking “strategic price increases, looking item by item across our assortment” to mitigate the impact of higher tariffs. G-III Apparel Group — The apparel company tumbled 15% on much weaker-than-expected earnings guidance for the second quarter. The company sees earnings per share in a range of 2 cents to 12 cents. Analysts had estimated earnings of around 48 cents per share, according to FactSet. DocuSign — The electronic signature stock plunged 19% after the company cut its full-year billings forecast. Billings for the fiscal first quarter also came in lower than expected. Braze — Shares of the customer engagement platforms provider fell 13% on disappointing guidance. Braze guided for second-quarter adjusted earnings of 2 to 3 cents per share. Analysts polled by FactSet called for 9 cents per share. Its first-quarter results beat estimates. Quanex Building Products — The maker of windows and doors and other construction materials soared 18%, the most since September, after earning an adjusted 60 cents per share in its fiscal second quarter versus analysts’ consensus estimate of 47 cents, on revenue of $452 million against the Street’s $439 million, FactSet data showed. Adjusted EBITDA also topped forecasts. Samsara — Shares shed 5% after the software company projected revenue growth to slow. Samsara guided for second-quarter revenue to increase between $371 million and $373 million, up from the $367 million in the first quarter. That would be a slowdown on both a sequential and year-over-year basis. Solaris Energy Infrastructure — The oil and natural gas equipment and service provider rallied 10% after Barclays initiated research coverage with an overweight rating and $42 price target. “Solaris is the leader in distributed power with almost 2 GW of capacity to be added by 2027 with 67% allocated towards data centers on long term contracts,” the bank said.
A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.
Fabrice Coffrini | AFP | Getty Images
The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.
The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.
“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.
The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.
“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.
‘Too big to fail’
UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.
The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.
Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.
At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.
Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.
“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.
“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”
The prospect of stringent Swiss capital rules and UBS’ extensive U.S. presence through its core global wealth management division comes as White House trade tariffs already weigh on the bank’s fortunes. In a dramatic twist, the bank lost its crown as continental Europe’s most valuable lender by market capitalization to Spanish giant Santander in mid-April.
Check out the companies making the biggest moves in premarket trading: Tesla —The EV maker added nearly 5%, a day after plunging 14% as CEO Elon Musk and President Donald Trump publicly feuded . Broadcom — Shares of the chipmaker slipped about 2% before the opening bell, on the heels of lackluster free cash flow in the second quarter. Broadcom reported free cash flow of $6.41 billion, while analysts surveyed by FactSet were looking for $6.98 billion. Broadcom stock has risen more than 12% year to date. Circle Internet Group — The stablecoin company popped nearly 14%, following its debut on the New York Stock Exchange Thursday. Circle soared 168% in its first day of trading . Lululemon — Stock in the athleisure company pulled back nearly 20% after its second-quarter outlook missed analyst estimates. Lululemon forecast earnings per share in the current quarter in the range of $2.85 to $2.90 per share, while analysts polled by LSEG were looking for $3.29. The firm also slashed its earnings outlook for the full year. DocuSign — The electronic signature stock plunged 19%. Despite beating Wall Street expectations on both lines for the first quarter, billings came in lower than anticipated, per FactSet. DocuSign also set current-quarter guidance for billings that was below analysts’ consensus forecast. Braze — Shares of the customer engagement platforms provider fell 6% following the company’s disappointing guidance. Braze guided for second-quarter adjusted earnings between 2 cents and 3 cents per share, while analysts polled by FactSet called for 9 cents per share. Its first-quarter results beat estimates. Samsara — Shares shed 12% after the software company projected revenue growth to slow. Samsara guided for second-quarter revenue to increase between $371 million and $373 million, up from the $367 million in the first quarter. That would be a slowdown on both a sequential and year-over-year basis. Rubrik — The stock gained about 4% following the cloud data management company’s top and bottom line beats for its first quarter. Rubrik lost an adjusted 15 cents per share, narrower than the 32 cent loss expected from analysts polled by FactSet. Revenue was $278.5 million, versus the $260.4 million consensus estimate. —CNBC’s Alex Harring and Brian Evans contributed reporting.