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Telefonica Eyes M&A to Drive European Telecom Consolidation, CEO Murtra Says

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Telefonica (TEF.MC) is preparing a bold M&A strategy to reshape Europe’s fragmented telecom market, while offloading assets in Latin America to free up capital, CEO and Executive Chairman Marc Murtra told Reuters. His first strategic plan since taking the helm in January envisions building “titanic European operators” to compete globally in telecoms, AI, and digital infrastructure.

Murtra argues that Europe’s market is too fragmented—with 41 operators serving more than 500,000 customers each, compared with just five in the U.S.—and consolidation is needed for competitiveness. Regulators, long wary of higher prices, may now be more open as geopolitical tensions drive Europe to reinforce its strategic autonomy in defense and critical infrastructure.

To fund acquisitions, Telefonica has already agreed to sell its Argentina and Uruguay units, while exploring sales in Chile, Mexico, and Ecuador, which analysts say could free up €3.6 billion ($4.2B). The group has not commented on reports it may raise additional capital.

Potential M&A targets include Vodafone Spain, Germany’s 1&1, assets in Brazil, or Liberty Global’s 50% stake in Virgin Media O2, according to analysts and dealmakers. Meanwhile, French rivals Orange, Bouygues, and Iliad are rumored to be circling Altice’s SFR, signaling a wave of regional consolidation.

Murtra’s vision also involves a “social contract” with regulators: allow consolidation in exchange for commitments to invest in cybersecurity, AI, and data centers. “Imagine a Europe where the satellite systems, the hyperscalers and artificial intelligence are in the hands of tech bros—and this could happen,” Murtra warned.

Telefonica’s shares have rallied since Murtra’s appointment, though its market cap has halved since 2015, and it remains among Europe’s most shorted stocks. Still, analysts see merit in the plan. Moody’s Carlos Winzer noted that scale is “absolutely fundamental” in telecoms, while investment bankers predict country-level consolidation first, followed by cross-border deals.

If Telefonica succeeds, it could trigger a wave of European telecom M&A, pulling in giants like Orange, Deutsche Telekom, and BT, and redefining the continent’s digital infrastructure landscape.

European telecom firms warn against EU deregulation push, fear market ‘re-monopolisation’

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A group of European telecom companies, including Vodafone, Iliad, and 1&1, have jointly criticized the European Commission’s proposal to relax regulations on fixed broadband networks, arguing that such a move could reverse progress on market competition and fiber optic rollout.

In an open letter published Thursday, the companies expressed concerns that loosening regulations for dominant operators—typically former monopolists such as Deutsche Telekom in Germany—would lead to a “re-monopolisation” of national markets and undermine the EU’s digital goals.

Pushback against deregulation

The European Commission is reviewing rules that currently require dominant network owners to allow competitors access to their infrastructure under regulated terms. The proposal under consideration would ease those obligations, particularly in markets deemed to have improved competition.

However, the signatories of the letter argue that such deregulation would be a “step backwards” for Europe. They warn it would:

  • Contradict the EU’s own pro-competition policies,

  • Stifle the deployment of fiber optic networks,

  • Reinforce the dominance of historical operators in national markets.

“This would undo years of progress and hurt consumer choice,” the letter states.

Fiber optic rollout remains contentious

The development and expansion of fiber-to-the-home (FTTH) networks remains a divisive issue across Europe. Smaller telecoms argue that the incumbent operators—who control much of the legacy infrastructure—already enjoy significant advantages, and further deregulation would only deepen their dominance.

National developments reflect broader tension

Earlier in July, Germany’s Bundestag passed new legislation aimed at accelerating the rollout of fiber and mobile networks. However, critics say that without firm regulatory oversight, smaller providers risk being squeezed out of lucrative markets, undermining investment diversity.

With the EU pushing for widespread gigabit connectivity by 2030, the tension between market liberalization and infrastructure control is emerging as a key regulatory battleground.