Heeding the Book of Mario
Will 2026 finally be the year Europe’s TelCos begin to consolidate?
No one in Brussels is certain when Mario Draghi was determined to be the second coming of the almighty. But since his report on regaining European competitiveness dropped, a fun new drinking game has swept the conference scene: you take a drink every time the Italian maestro’s name is evoked by a lobbyist arguing for their concerns to be front and centre, and you see if you can make it to lunch.
And when it comes to TelCos, The Book of Draghi is clear in its commandment: “thou shalt consolidate thy telecommunications sector”.
Europe cannot build the networks, data-layer infrastructure or cloud-integrated connectivity – much less the data centre capacity – needed for the next technological cycle if it continues to force four and five-player mobile markets in every Member State. In Draghi’s view, the EU’s ex-ante regulatory model has produced investment paralysis. The cure is scale. Fewer, stronger operators. Consolidation.
2026 may be the year Europe finally tests that hypothesis. Not in position papers or on conference stages, but in actual transactions.
The spark came from France. In October 2025, three rivals — Orange, Bouygues Telecom and Iliad (Free) — tabled a coordinated €17 billion non-binding offer to carve up SFR, the Altice-owned operator that has long served as France’s fourth national mobile player. The structure is as audacious as it is simple: split SFR’s consumers, fibre customers, mobile subs and B2B units among the three existing operators, with Bouygues taking roughly 43%, Iliad around 30% and Orange the remainder.
Altice rejected the bid instantly, but that is beside the point. The mere existence of a three-way carve-up proposal shows how far the industry is now willing to push. Telco CEOs have been broadcasting the Draghi message for years; the difference in late-2025 is that policymakers finally started repeating it back.
Telefónica chair Marc Murtra warned that without consolidation, Europe will fall still further behind the U.S. and China on network quality and digital competitiveness. Orange’s Christel Heydemann has been equally explicit: the continent cannot fund fibre-to-the-home and 5G-to-6G rollouts with operators starved of margin and scale. Vodafone, Deutsche Telekom and Nokia executives have echoed the same line in industry forums: Europe built a regulatory framework for the copper age and never updated it for a world in which telcos must act like infrastructure investors rather than regulated utilities.
Draghi and Enrico Letta have given this investment-thesis a political vocabulary — “competitiveness”, “scale”, “sovereignty”, “European champions” — and the Commission has begun to fold those concepts into the broader industrial-policy push around AI, cloud, quantum and semiconductors. Telecoms have been recast as strategic infrastructure, not consumer markets.
But that doesn’t change the basic merger control problem: a four-to-three mobile consolidation is still a four-to-three consolidation. And under EU law, that is one of the hardest transactions to clear.
The SFR test case
Altice France remains heavily levered, even after its partial restructuring. Any credible movement toward a binding deal re-rates its debt sharply. So if it does eventually come to pass (and this saga almost certainly isn’t over yet), the SFR approval will be the defining test of how much attitude in Brussels has actually shifted.
DG COMP has spent a decade treating 4 to 3 mobile mergers as near-automatic Phase II candidates. Market power concerns, loss of infrastructure competition, and the structural importance of having multiple network operators have formed the core reasoning across all recent files.
The French bid is messier still. A three-way carve-up is not a workaround. Economically, it is the elimination of an entire network operator and the redistribution of its assets to the remaining three. The Commission will analyse it exactly as a traditional 4 to 3, regardless of how clever the engineering might look. Expect immediate questions on spectrum concentration, MVNO access, wholesale pricing, fibre–mobile bundling, and the long-term impact on investment incentives.
The political backdrop may nudge direction, but it won’t rewrite jurisprudence. Phase I clearance is almost impossible. Structural remedies are inevitable. And if Brussels insists on a “fourth operator solution”, the entire deal structure falls apart.
Could 2026 be the turning point?
Three forces make the 2026 consolidation window unusually live.
First, debt pressure. Altice is not the only operator sitting on legacy leverage. Across Europe, sub-scale fixed and mobile operators face rising refinancing costs, stagnating revenue and capex demands that cannot be deferred. M&A becomes the only path to balance-sheet repair.
Second, political cover. Draghi and Letta have legitimised market restructuring. CEOs no longer sound like self-interested lobbyists; they sound like they are reading aloud from EU strategy documents. Policymakers now routinely use the word “scale” in public, something unthinkable five years ago. The only question is, who’s going to break cover first?
Third, the technology cycle. 6G trials, edge–cloud integration, AI-assisted network orchestration and fibre densification all require capital far beyond what the current market structure can sustain. Even regulators who dislike consolidation recognise that under-invested networks are far worse.
France is the headline, but not the only front.
Italy remains the most volatile market in Europe. TIM’s separation of NetCo and ServiceCo is still incomplete, government intervention remains unusually active, and Vodafone Italy sits in a structurally awkward position. A merger between Vodafone Italy and Iliad Italia (revived under the right pricing) or consolidation involving Fastweb cannot be ruled out.
Spain is equally unsettled. Telefónica has embraced the Draghi thesis publicly. A tie-up with Vodafone Spain, MasMovil or a partial asset deal remains plausible, though national-security sensitivities around Spanish telecom infrastructure make foreign bidders think twice.
Germany is the long shot but not completely dormant. A future recombination involving O2/Telefónica Deutschland and a cable-broadband player (e.g., Vodafone’s German broadband business) is the kind of file Draghi would consider “rational”, even if DG COMP would treat it as a multi-market integration puzzle.
CEE markets — Poland, Czech Republic, Hungary — remain fertile ground. Regional roll-ups by PPF or Liberty Global could become the arbitrageurs’ quiet bread-and-butter deals: smaller, less politically visible, and often easier to approve.
Draghi thinks Europe must scale up or accept permanent digital inferiority. CEOs think the same. But DG COMP is not in the business of rewriting its own rulebook because the macro-narrative feels urgent. The SFR file will tell us whether policy rhetoric finally aligns with merger-control execution.
If it clears — even with brutal remedies — the seal is broken. Expect a cascade of Italy, Spain and CEE deals, with arbs suddenly living in a sector they had written off years ago. If it fails, the Book of Mario gets another depressing chapter: the EU declares the age of scale but governs as if it is still the age of copper
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