Vodafone’s Vittorio Colao sees further EU phone tie-ups

Vodafone Group chief executive Vittorio Colao sees three or four pan-European telecoms giants emerging in the coming years as companies continue to engage in deals amid a growing need for investment in networks.

"There's a bit of consolidation that needs to take place [in individual markets] – having stronger, bigger operators that can invest would be in the interests of everybody," Mr Colao said in an interview with The Irish Times.

“And then there will probably be some tension to aggregate cross-country. So I can see the emergence of probably three, maybe four, very large pan-European players. And then every market having the choice between three alternatives, which is a set-up that isn’t wrong.”

Europe accounted for two-thirds of Vodafone's £37 billion total service revenue in the 12 months to the end of March, following years of restructuring, including the $130 billion (€115 million) sale of its 45 per cent stake in Verizon, the US's largest wireless operator, in 2014.

The company has about 122 million mobile and 12 million fixed broadband customers across 13 European countries. The company has 2.29 million customers in Ireland. Mr Colao said the European Commission was right last month to block efforts by Hutchison Whampoa, controlled by Hong Kong billionaire Li Ka-shing, to acquire Spanish phone company Telefónica's O2 unit in the UK.

Two years ago, Brussels allowed Hutchison's Three brand to buy O2 in Ireland.

"The UK case was very difficult from the beginning," said Mr Colao, as the merged company would have had network sharing agreements with Vodafone and BT's mobile unit, EE. Hutchison is seeking approval from European competition authorities to merge its Italian unit with the local division of Dutch operator VimpelCom.

Mr Colao said French operator Orange "has a clear ambition to be multi-country", while he suggests that links between BT and Deutsche Telekom "will grow in importance" over time.

Deutsche received a 12 per cent stake in BT this year after it elected to be paid partly in stock for a holding in EE.