Mobile consolidation fails in design, not ambition

Mobile network consolidation is back on the agenda. A more favourable regulatory stance towards four-to-three mergers, combined with ongoing economic pressure on telecoms operators, has reopened conversations that many had assumed were closed. The question is no longer whether consolidation makes strategic sense, but whether it can survive regulatory, political and economic reality.

The UK’s Vodafone–Three deal in 2025 was a turning point. But it also showed how much harder the process has become since the last wave of consolidation attempts in Europe. Now, more stakeholders have a say, the conditions attached to approval are evolving and operators need to be prepared for a wider range of demands. 

Future consolidation deals will require a co-ordinated approach across competition strategy, political engagement, deal economics and operational delivery – built in from the start, not retrofitted after the deal structure is agreed.

Too many networks, not enough returns

Regulators have traditionally relied on consumer-harm arguments to block deals, as they did with the 2016 O2–Three merger, but that case is becoming harder to make. Prices are low and quality of service is high; consumers across European mobile markets are getting a good deal.

But while their customers are well served, operators are not. Network investment requirements for 5G, densification, coverage and resilience continue to rise, yet revenue growth has not kept pace. Mobile networks have always been a form of critical national infrastructure, but the bar is being set ever higher – with cost implications to match.

In many smaller, mature European markets, it is becoming increasingly difficult to sustain four or more networks all carrying the same investment burden while earning acceptable returns. Capital requirements for 5G, densification, coverage and resilience continue to rise, while growth remains limited. In these conditions, multiple operators are often duplicating infrastructure and diluting returns. More consolidated market structures can improve the efficiency and sustainability of investment, supporting stronger networks and better long-term outcomes for consumers, enterprises and the wider economy. Where markets cannot sustain multiple parallel networks, consolidation becomes less a strategic choice and more an economic reality.

Remedies define the deal from day one

Mobile merger approvals have always included remedies, but these remedies are no longer concessions to seal the deal. They define the competitive environment in which the merged entity will operate, and they can determine whether the business case survives.

The most significant risk is that a remedy alters the market in ways the merging parties did not anticipate. The creation of WindTre in Italy and the 2023 Orange–MásMóvil deal in Spain both required spectrum divestments that allowed for the entry of aggressive new players – Iliad and Digi, respectively. The result has been a smaller market for everyone, renewed price competition, margin compression and slower returns on capital. Remedies designed to preserve competition ended up significantly increasing it, thereby eroding the very value the mergers were intended to create.

Remedies can also render a transaction unworkable before it is completed. TeliaSonera and Telenor walked away from their proposed merger in Denmark in 2015 because the parties already shared network infrastructure through TT-Netværket (TTN), limiting the available synergies. The remedies required to satisfy the competition authority outweighed whatever value remained.

Remedies are not side conditions; they are the deal. If you do not design yours, the regulator will – and their version will not protect your business case. Any operator entering a consolidation process needs remedy strategy at the centre, with scenarios modelled and stress-tested before terms are agreed.

Approval is now a multi-stakeholder exercise

Even operators that get their regulatory strategy right can still be blindsided by the rest of the room. Governments, ministries and national security institutions now all have a seat at the deal table, and their priorities are increasingly written into the conditions of approval. A regulatory strategy focused solely on the competition authority is no longer enough.      

Investment commitments, coverage obligations and infrastructure deployment targets have all become part of the package, driven by the recognition that mobile networks underpin critical national services – from security infrastructure and safety management solutions to data services for Public Protection and Disaster Relief (PPDR) and energy infrastructure. With AI, autonomous systems and always-on connectivity accelerating, their role in economic strength and national resilience will only deepen.

The formal process is also unpredictable. The European Commission (EC) has overseen almost every major four-to-three case in the European Union (EU) to date, and has taken a different approach each time: from spectrum divestment in Italy and Spain, to wholesale access in Germany when O2 and E-Plus merged in 2014. 

There is no standard playbook for getting the ideal merger approved, and encouraging the EC towards investment-based remedies rather than more traditional interventions will be one of the harder arguments to make. Deal structures must therefore be flexible enough to accommodate conditions that were not anticipated at the outset, and governance must be strong enough to respond to them quickly. In our experience, that requires:

• pre-agreed decision thresholds between merging parties, so that responses to changing conditions do not stall in internal negotiation
• scenario-based governance models that allow leadership to evaluate and act on remedy proposals without starting from scratch each time
• a structured political engagement programme that runs in parallel with the regulatory process.

How operators should approach consolidation

More broadly, we see a recurring pattern across the market: deals often fail because they are poorly designed. What distinguishes successful consolidation is whether approval, integration and commercial execution are built into the transaction from the outset. This is where early engagement with an experienced adviser, such as Analysys Mason, can make a material difference, helping to shape the deal around real-world constraints rather than theoretical assumptions.

This is what we tell operators that are serious about getting a consolidation deal through:

1. Put competition strategy at the centre 

If your consolidation process is led by finance alone, or driven into the Chief Technology Officer’s (CTO) domain as a technical synergies play, you are set up for failure. Competition strategy belongs at the start of the process, not retrofitted to a structure already agreed.

2. Design the deal around the requirements for approval

Do not design the deal you want and then hope it gets approved. Design a deal that can succeed, and build the business case around it. 

There is a temptation to commit to a bigger, grander version of yesterday's network, but coverage priorities, technology and demand patterns will change. An obligation spanning 8 to 10 years needs room to evolve, and operators that lock themselves into rigid investment commitments early may regret it.

3. Assemble cross-functional teams early

Regulatory, commercial, technical, operational, IT and supply-chain teams all need to be aligned from the beginning. The dependencies between these workstreams multiply quickly, and one workstream pursuing a strategy not supported by another is one of the most frequent and avoidable failures we see in the wider transaction market – particularly where alignment is not established early with the support of experienced advisers.

4. Engage the full range of stakeholders 

Stakeholders that are consulted late push back hard. Competition authorities, governments, industry bodies and major network users all have interests that will influence the outcome. Build with those interests in mind from the start.

5. Think creatively about deal structure

Not every market will support a full merger, and not every operator will get one through. Network sharing is attracting growing interest as a route to deliver synergies without the full complexity of a merger review, and we are seeing these discussions run in parallel with consolidation conversations. Operators that limit themselves to a binary choice between merger and status quo are leaving valid options on the table.

More mergers are inevitable – their outcomes are not

The biggest lie that operators tell themselves is that the market will not change. It will. Competitors will respond, sometimes more aggressively than before, and the conditions of approval will take markets in directions not originally planned. 

In our experience, more deals are killed by misalignment between the merging parties than by competition authorities. Operators come together because they feel they should, but without a shared strategy and investment thesis, many never even reach heads of terms.

The earlier that approval and delivery constraints are built into the deal structure, the greater the likelihood of completing – and sustaining – the transaction.

More European mobile mergers are coming, as there are countries with obvious tie-ups and four-to-three opportunities. The deals that succeed will be built on honest assumptions, creative structures and the right expertise around the table. The ones that fail will follow a familiar pattern, in which approval, remedies and execution are treated as problems to solve after terms are agreed.

Operators and investors considering network consolidation should be engaging with us now on deal design, regulatory strategy and execution planning. From full mergers to sophisticated network-sharing arrangements, we support operators and investors in stress-testing the model until it works in the real world, not just on paper. 

If consolidation is on your agenda, now is the time to stress-test your strategy. Speak to our mobile consolidation team before terms are set.