The potential merger between Telefónica and Vodafone Spain is moving forward amidst denials, strategic maneuvers, and tacit support from the CNMC. Brussels will have the final word, but the future of the sector seems already decided.
In the competitive landscape of European telecommunications, silence sometimes speaks louder than a thousand press releases. Telefónica and Vodafone Spain continue to officially deny any merger activity, but the signs, financial analyses, and institutional gestures suggest a reality that is slowly unfolding. One of the clearest indicators came this week from the National Commission of Markets and Competition (CNMC).
Cani Fernández, the president of the organization, has given what many interpret as an early green light for the integration between both companies, at a time when sector consolidation seems not only inevitable but even desirable from a regulatory and strategic standpoint.
“European telecommunications companies are now being asked to look further into the future,” the CNMC president stated, highlighting the need to strengthen operators on the continent against U.S. and Chinese giants.
The European Telecoms Project: Stronger or More Concentrated?
For years, Brussels has been advocating for the creation of “European champions” in key sectors, and telecommunications is no exception. However, this argument clashes with another more uncomfortable one: the risk of oligopoly. In a continent where fragmented competition has kept prices competitive and spurred some innovation, how can one justify mergers that reduce the number of key players?
The CNMC president cited the recent merger between Vodafone and Three in the UK as an example, an operation that was approved under strict conditions and investment commitments. The new company will invest €13 billion in 5G networks over the next decade, under continuous supervision from UK regulators. This model hints at what could happen in Spain if the operation with Telefónica goes through.
Yet, the on-the-ground reality is more gray than promising. Telefónica continues to divest in Latin America, where only Brazil seems to offer healthy margins. In Europe, its situation is also tight: Germany poses complex challenges, and growth in the UK is slower than expected. The proposed acquisition of Vodafone Spain is not just an expansion maneuver; it’s a potential avenue to strengthen positions in an increasingly competitive national market.
Digi, MásOrange, and the Role of the “Fourth Operator”
An argument in favor of these mergers, also referred to by the CNMC, is that they help strengthen the “fourth operator.” In Spain, that role has fallen to Digi after the merger of MásMóvil and Orange. However, while this new entity gains strength, Telefónica’s absorption of Vodafone could create a domino effect: less real competition and a market divided into overly rigid blocks.
Mergers are not just about the number of operators; they also have repercussions on other layers of the ecosystem, such as ‘fibercos’—vehicles for managing fiber optic networks—and ‘towercos’, companies that operate telecommunications towers.
Currently, Spain has four major tower companies: Cellnex, American Tower, Vantage, and Totem. According to Fernández, consolidation is likely to occur in this sector in the coming years. The same logic applies: efficiency, scale, shared investment. But there’s also a possible risk: greater dependency on fewer key players in critical infrastructure.
And Brussels?
Despite the public statements and indications pointing to the viability of the deal, the legal reality is that the final decision rests with the European Commission. Vodafone Spain belongs to the British fund Zegona, and although Telefónica is Spanish, it operates within a framework with deep transnational implications.
The Commission has already shown reluctance regarding other mergers in the sector when effective competition has not been guaranteed. Hence, the British precedent—Vodafone + Three—will be key to observing Brussels’ reaction to this new concentration in Spain.
Silence Sounds Like Agreement
From Telefónica, Marc Murtra has reiterated that they do not comment on these types of operations, although he has hinted that companies often deny what they are interested in to avoid speculation and stock market volatility. In this context, such denials sound more like strategy than genuine rejection.
Meanwhile, reports are multiplying indicating that Telefónica has already commissioned feasibility studies to acquire Vodafone Spain. The synergies could be numerous: network sharing, cost optimization, negotiating power with technology providers… But they would also raise alarms about an increasingly closed market dominated by the same players.
The Transformation of the Sector Is Here
Beyond the Vodafone case, the truth is that the telecommunications market is undergoing unprecedented transformation. New business models—like those mentioned ‘fibercos’ or vertical digital platforms—are forcing operators to gain financial muscle to undertake investments in 5G, artificial intelligence, and ultra-low-latency networks.
For that, often the only viable option is to merge. Or to buy. Or to be bought.
“Such movements seek to gain flexibility and provide the necessary financial resources for new investments,” acknowledged the CNMC president, with a more understanding than regulatory tone.
And the Consumer?
In the midst of this battle for control of the future, the voice of the end user remains absent from the debate. Mergers promise efficiency, but often translate into less competition, fewer options, and less dynamic pricing.
In a Spain where connectivity is vital for daily life and the productive fabric, who ensures that this consolidation doesn’t end up impoverishing the offerings?
For now, everything remains in limbo. Brussels will have to decide. But the script seems already well-written: European telcos want to play in the big leagues, and for that, the market will have to be smaller… but stronger.
Source: economiadigital