Musical Chairs for EU Telecoms

MUSICAL CHAIRS FOR EU TELECOMS
[SOURCE: Wall Street Journal, AUTHOR: Leila Abboud leila.abboud@wsj.com]
Across Europe, major telecommunications companies are shuffling their asset portfolios as they look for a mix that will allow them to maintain profitability as growth slows. In recent years, many of Europe's largest participants rushed into each others' backyards to find new customers for their fast-growing broadband or mobile units. That left many of these companies with a patchwork of assets across countries that often lacked the scale to compete with the local incumbent. The deals come as Europe's telecoms try to devise strategies to survive in an increasingly difficult market. Revenue in telecom services across Europe grew less than 3% last year, according to Idate Consulting & Research. Fixed-phone revenue is dropping under pressure from free Internet calling services like Skype, while Europe's mobile-phone businesses, long a reliable engine of growth, have been hit hard by European Union regulations mandating lower tariffs for consumers. The EU ordered a decrease in roaming tariffs for cross-border calls and lower charges for calls terminating on other networks. Many had been expecting a more sweeping consolidation among large European telecoms along the lines of what has happened in the U.S., where companies such as AT&T Corp. and SBC Communications Inc. have merged in recent years to cut costs and gain scale. But European telecom operators can't reduce staff as easily, limiting synergies from a merger. At Deutsche Telekom and France Télécom, many workers retain civil-servant status from when the companies were state-owned, making it almost impossible to lay them off.
http://online.wsj.com/article/SB118090969115423077.html?mod=todays_us_page_one
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