Increasing Mobile Market Concentration in the EU and Germany

Market concentration in the mobile phone sector in the European Union (EU) has been increasing since the beginning of the 21st century. In the mid-1990s, mobile phone markets were already expanding largely following EU-wide liberalisation. A consolidation process is currently taking place, which is reflected in the rising number of mergers and acquisitions. Between 2003 and 2013, both the number of transactions and transaction volumes have increased.

The number of transactions grew from 27 in 2003 to 41 in 2013; transaction volumes surged from EUR 3.1 billion to EUR 9.6 billion. These are the results of a survey on mergers and acquisitions in the mobile phone sector between 2003 and 2013 conducted by the Centre for European Economic Research (ZEW) in collaboration with Bureau van Dijk (BvD). The survey is based on the Zephyr data base that provides daily in-depth information on more than a million mergers and acquisitions, stock market launches and private equity transactions worldwide.

The multi-billion merger of E-Plus, a subsidiary company of Dutch telecommunications provider KPN, and O2, a mobile brand of the Spanish Telefonica group, which was already announced in the summer of 2013, confirms that an equivalent consolidation process is taking place in Germany, too.

Since the beginning of the 21^st century, sinking profit margins caused by increasing competition and a higher regulation intensity have led to consolidation on mobile phone markets. “However, the strong market concentration will eventually culminate in an even more intense price war – a development that has already started in the US,” says Tobias Spanka, General Manager at BvD. Moreover, traditional mobile services like telephony, Short Message Service (SMS) or mobile Internet are facing increased competition from messaging services like WhatsApp or the Facebook chat, which has already led to severe losses in turnover for a number of companies.

For further information please contact

Dr. Wolfgang Briglauer, Phone +49(0)621/1235-279, E-mail briglauer@zew.de