France is likely to be the next major European market to go from four to three mobile operators in 2026

The European Commission appears increasingly open to mobile-market consolidation. Historically resistant due to concerns over market concentration and consumer impacts, European governments and the Commission are now placing greater weight on the need for large-scale investment in networks to support digital transformation, improve coverage and bolster resilience. With this shift in emphasis, the long-stalled debate about whether Europe’s four-player markets should move to three has reopened.

If the door to consolidation is opening, which major mobile market will be next over the threshold? 

Of Europe’s five largest mobile markets, the UK has already made the transition from four network operators to three. Gaining approval from competition authorities was arduous, taking two years from signing to closing, but the completion of the merger between Vodafone and Three in 2025 will embolden operators and investors across Europe. 

France, Spain Germany and Italy all have mature and competitive four-player mobile markets. The shift in regulatory focus from price competition to investment in coverage and network resilience gives greater freedom for operators to seek the efficiencies and opportunities that come with greater scale. Competition authorities will still be wary of concentrations of market power, but smaller operators may be able to seize this emerging window of opportunity.

France has seen one recent attempt at consolidation, when a EUR17 billion offer to acquire SFR was put forward by a consortium of the other large operators in the country (Orange, Bouygues Telecom and Iliad/Free). The offer was quickly rejected by majority owner Patrick Drahi. However, the deal is not dead in the water: discussions continue and SFR’s bond holders might apply pressure to accept a revised offer. We predict vigorous negotiation behind the scenes as this value-creation opportunity remains in everyone’s interest.

In the Spanish market, the most obvious target for an acquisition would be Zegona. Following a deal to sell its fibre assets, Zegona has substantially reorganised its financial position, and now may be a natural time for its owners to exit their investment. But are any of its competitors in a position to take on Zegona’s business? MasOrange and Telefónica are the largest operators, so even in a context of loosening constraints there would be questions over concentration of market power. The final operator, Digi, would require significant ambition and some financial gymnastics. Alternatively, Digi may be considering a stock-market floatation, which would free up funds to take on Zegona’s consumer division, leaving MasOrange and Telefónica to fight over the business division. It seems highly likely that there will be activity in the Spanish market, but the complexity means 2026 looks a stretch: Spain looks set to retain a four-player market at least for the short-term future. 

The Italian market has already seen major disruption. The entry of Iliad caused a price war in which the new entrant gained substantial territory; Vodafone, one of Italy’s established operators, was sold to Swisscom and is now being integrated with Swisscom’s Italian subsidiary Fastweb. Both events created additional turbulence in a market already characterised by volatility. The most plausible opportunity among the Italian players is to respond to the threat from Iliad with acquisition. It is possible that Swisscom’s ownership of Vodafone will give it the firepower and ambition to absorb Iliad; TIM recently sold its fixed network to KKR, so may have the funds to consider a major investment, but the size of both operators, coupled with TIM’s incumbent status, may prove a significant regulatory obstacle; WindTRE probably has the simplest route to merge with Iliad. This merger is the only deal with any realistic chance of being signed in 2026, but is unlikely to be resolved before France’s SFR deal. 

The German market’s three established networks accommodated the entry of a challenger, 1&1, without (so far) suffering the same level of disruption and value destruction that was seen with the entry of Digi in Spain and Iliad in Italy. 1&1, as the challenger network, is the most obvious target for a take-over. 1&1 will not be seeking a complete market exit, but it is possible that one of the bigger players – Telefónica is the most plausible candidate – could form a joint venture with 1&1. Again, an announcement in 2026 seems unlikely in light of the complexity associated with forming a joint venture, as well as the wider financial pressures on mobile networks across Europe.

The European mobile markets are mature, with high fixed costs. When considering a merger case, operators need to examine the case in relation to slowing traffic growth and lengthening network upgrade cycles. The reasons for regulatory resistance to consolidation easing are aligned with operators’ eagerness to restructure markets. The transition from four operators to three therefore looks like a matter of ‘when’ (and ‘who’) rather than ‘if’.