‘Please unleash us,’ Europe’s telcos urge regulators as industry bangs drum for more mega-deals
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.”
Meanwhile, last year former European Central Bank President Mario Draghi released a long-awaited report that urged radical reforms to the EU through a new industrial strategy to ensure its competitiveness.
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.
Nvidia CEO Jensen Huang delivers the keynote address during the Nvidia GTC 2025 at SAP Center on March 18, 2025 in San Jose, California.
Justin Sullivan | Getty Images
Nvidia said on Tuesday that it will take a quarterly charge of about $5.5 billion tied to exporting H20 graphics processing units to China and other destinations. The stock slid more than 6% in extended trading.
On April 9, the U.S. government told Nvidia it would require a license to export the chips to China and a handful of other countries, the company said in a filing.
The disclosure is the strongest sign so far that Nvidia’s historic growth could be slowed by increased export restrictions on its chips, which the U.S. government says can be used to create supercomputers for military uses. Nvidia reports fiscal first-quarter results on May 28.
During President Biden’s administration, the U.S. restricted AI chip exports in 2022 and then updated the rules the following year to prevent the sale of more advanced AI processors. The H20 is an AI chip for China that was designed to comply with U.S. export restrictions. It generated an estimated $12 billion to $15 billion in revenue in 2024.
Nvidia CEO Jensen Huang said on the company’s last quarterly earnings call in February that revenue from China had dropped to half of pre-export control levels. Huang warned that competition in China is growing, and for the second straight year, Nvidia listed Huawei as a competitor in its annual filing.
China is Nvidia’s fourth-largest region by sales, after the U.S., Singapore, and Taiwan, according to the company’s annual report. More than half of its sales went to U.S. companies in its fiscal year that ended in January.
Nvidia’s H20 chip is comparable to the H100 and H200 AI chips used in the U.S. and other countries, but it has slower interconnection speeds and bandwidth. It’s based on a previous generation of AI architecture called Hopper introduced in 2022. Nvidia is now focusing on selling its current generation of AI chips, called Blackwell.
DeepSeek, the Chinese company whose competitive AI model R1 unveiled earlier this year upended markets, used H20 chips in its research.
In addition to the existing Chinese export controls, Nvidia also faces new restrictions on what it can export starting next month, under “AI diffusion rules” first proposed by the Biden administration.
Nvidia has argued that further controls on its chips would stifle competition and potentially even erode U.S. competitiveness in technology. The company previously said it moved some of its operations, including testing and distribution, out of China after the 2022 export controls.
At the company’s annual conference last month, when asked about Chinese export controls, Huang said Nvidia works to comply with the law, but he also noted that about half of the world’s AI researchers are from China, and many of those work at U.S.-based AI labs.
Nvidia said in Tuesday’s filing that the U.S. government told the company on Monday that the license requirement for H20 chips would be in effect “for the indefinite future.”
Nvidia shares have dropped 16% this year, largely due to President Trump’s announcement of widespread tariffs on top trading partners. While exemptions have been made on various electronics products, including smartphones, computers and semiconductors, Trump and some officials said over the weekend that the reprieve was temporary and part of plans to apply separate tariffs to the sector.
Shares of Advanced Micro Devices dropped more than 7% in after-hours trading on Tuesday following Nvidia’s disclosure. AI chipmaker Broadcom fell almost 4%.
WATCH: Nvidia says U.S. requires license to export H20 products to China
Dylan Field, co-founder and CEO of Figma Inc., after the morning sessions at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 11, 2024.
Bloomberg | Bloomberg | Getty Images
Design software maker Figma said on Tuesday that it has submitted paperwork to the U.S. Securities and Exchange Commission for an initial public offering.
The confidential filing lands 16 months after the company scrapped a deal to be acquired by Adobe for $20 billion due to regulatory pressure in the U.K. The San Francisco startup had originally agreed to the deal 2022. Adobe paid Figma a $1 billion termination fee.
Figma’s software is popular among designers inside companies who need to collaborate on prototypes for websites and apps. The company was valued at $12.5 billion in a 2024 tender offer.
“There are two paths that venture-funded startups go down,” Dylan Field, Figma’s co-founder and CEO, said in an interview with The Verge last year. “You either get acquired or you go public. And we explored thoroughly the acquisition route.”
The announcement lands at a precarious moment for the tech IPO market, which has been largely dormant since late 2021. The Trump presidency was expected to revive new offerings due to promises of less burdensome regulations.
But after filing their prospectuses with the SEC, fintech company Klarna and online ticket marketplace StubHub delayed their IPOs earlier this month following the market turmoil caused by Trump’s announcements on widespread tariffs. Digital banking service Chime, which had filed confidentially with the SEC, also postponed its planned offering.
Turo, a car-sharing service, withdrew its IPO prospectus in February, three years after filing its initial prospectus.
Figma was founded in 2012 and is backed by investors including Andreessen Horowitz, Durable Capital, Greylock Partners, Index Ventures, Kleiner Perkins and Sequoia Capital. The company, which ranked 26th on CNBC’s Disruptor 50 list in 2024, had about $600 million in annual revenue as of early last year.
— CNBC’s Ari Levy contributed to this report.
Technology
Meta CEO Mark Zuckerberg considered spinning off Instagram from Facebook in 2018: FTC trial
Thilina Kaluthotage | Nurphoto | Getty Images
Meta CEO Mark Zuckerberg considered spinning out Instagram in 2018 on concerns about the rising threat of antitrust litigation against Facebook, according to an email presented Tuesday in a Washington, D.C. courtroom.
During Zuckerberg’s second day of testimony in Meta’s antitrust trial with the Federal Trade Commission, lawyers representing the FTC introduced an email from May 2018, in which Zuckerberg appeared to comment on the possibility of separating the photo-sharing app his company purchased in 2012 for $1 billion.
“And i’m beginning to wonder whether spinning Instagram out is the the only structure that will accomplish a number of important goals,” Zuckerberg wrote in the email. “As calls to break up the big tech companies grow, there is a non-trivial chance that we will be forced to spin out Instagram and perhaps WhatsApp in the next 5-10 years anyway. This is one more factor we should consider.”
Facebook bought Instagram in 2012, when the photo app had 13 employees and Zuckerberg was poised to take his company public in what, at the time, was the largest tech IPO on record. The purchase of Instagram and 2014 acquisition of WhatsApp for $19 billion are at the heart of the blockbuster antitrust trial that kicked off Monday and could last weeks.
The FTC alleges that Meta monopolizes the social networking market, and has argued that the company shouldn’t have been able to complete those acquisitions. The agency is seeking to cleave the apps from Meta as a possible remedy.
Meta disputes the FTC’s allegations and claims the regulator mischaracterizes the competitive landscape and fails to acknowledge a number of rivals like TikTok and Apple’s iMessage, and not merely other apps like Snapchat. Earlier in the trial, the FTC also presented an Oct. 2013 email in which Zuckerberg told other Facebook executives that Snap CEO Evan Spiegel rebuffed his $6 billion offer to buy Snapchat.
Zuckerberg also said in the 2018 email that the company’s “best estimates are that, had Instagram remained independent, it would likely be around the size of Twitter or Snapchat with 300-400 million MAP today, rather than closer to 1 billion.” MAP is short for monthly active people.
WATCH: Mark Zuckerberg takes witness stand on first day of antitrust trial.
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