Spanish telecoms giant Telefonica is considering acquisitions across Germany, the UK, Spain, and Brazil, while planning to free up resources by selling its Spanish-speaking Latin American operations. Chief Executive and Executive Chairman Marc Murtra, who took charge in January, told Reuters he is preparing his first strategic plan to strengthen Telefonica’s position in Europe’s telecom sector, arguing that the market remains overly fragmented compared to other regions.
Murtra has been advocating for a regulatory shift that would allow more consolidation in Europe’s telecom industry, where 41 operators serve more than 500,000 customers each, compared to just five in the U.S. and three in South Korea.
He said large European operators are crucial if the region is to keep pace with advances in artificial intelligence, cybersecurity, and infrastructure. Murtra added that Europe risks losing strategic autonomy if satellite systems and AI development are dominated by non-European players.
To bolster its acquisition drive, Telefonica has already agreed to sell its units in Argentina and Uruguay, while exploring further divestments in Chile, Mexico, and Ecuador. Analysts at Kepler estimate such sales could provide up to €3.6 billion ($4.21 billion) in M&A firepower.
Potential acquisition targets include Vodafone Spain, a joint venture or stake in Germany’s 1&1, additional assets in Brazil, and Liberty Global’s 50% stake in Virgin Media O2. Telefonica has not commented on specific deals or reports of a possible capital raise to finance purchases.
The Spanish government-backed appointment of Murtra has buoyed investor confidence, with Telefonica shares rallying this year despite their market value halving since 2015. Analysts argue that consolidation could benefit both regulators, who would gain commitments on strategic investments, and operators, who would achieve much-needed scale.
With EU regulators considering easing rules for telecom mergers and geopolitical tensions spurring investment in critical infrastructure, bankers predict a wave of consolidation across Europe’s telecom sector in the coming years