Telecoms in the European mobile market have undergone significant consolidation, leaving operators facing increasing challenges.
The share of Europeans living in a country with only three mobile network operators (MNOs) is projected to grow from 46 percent in 2015 to 56 percent by 2025 due to mergers such as MASMOVIL –Orange in Spain and Vodafone–Three in the UK. While some new market entrants have managed to carve out a significant share, most have struggled to gain traction, Stefano Porto Bonacci, Principal Analyst at Analysys Mason, said in a recent report.
Iliad, for example, entered Italy in 2019 and secured a 16 percent market share in mobile connections within six years. However, this growth has come at the cost of financial losses. Iliad has reported revenue of €7.456 billion and operating profit of €1.215 billion for the first-nine months of 2024.
Digi aims to replicate Iliad’s success in Belgium, Portugal, and Spain, but the telecom industry remains challenging. Most fourth market entrants worldwide have struggled to scale, highlighting the broader difficulty of competing against established players.
Digi Communications reported €1.9 billion in revenue, reflecting a 13 percent increase, in Q4 2024. EBITDA stood at €580 million, while net profit reached a record €600 million. With a capital expenditure of €900 million, the company prioritized network expansion to support its continued growth.
Mobile virtual network operators (MVNOs) in Europe have also found it difficult to expand. Their market share increased marginally, reaching just 10 percent from 2015 to 2024. This suggests that budget-conscious customers remain their primary audience, with limited potential for broader market penetration.
Mergers have played a significant role in reshaping the industry. Many have been driven by two key factors: competition challenges among smaller MNOs and the financial instability of regional operators. In some cases, regulatory bodies intervened to ensure competition.
For instance, Italy has retained four MNOs after the European Commission mandated the sale of assets to Iliad following the Tre-Wind merger.
Similarly, Spain’s approval of the MASMOVIL-Orange joint venture came with concessions benefiting MVNO Digi.
The struggles of fourth market entrants extend beyond Europe.
In China, CBN captured only a 2 percent market share in two years.
Japan’s Rakuten Mobile, launched in 2020, reached just 4.2 percent market share by mid-2024 and lost customers when promotional offers ended.
Rakuten Mobile has achieved monthly EBITDA profitability in December 2024 — for the first time since the company entered the Mobile Network Operator (MNO) industry, recording 2.3 billion yen.
South Korea’s Stage X failed to raise sufficient capital for 5G deployment, leading to the withdrawal of its license.
In the US, DISH has faced delays in its 5G network rollout, securing an extension from regulator FCC.
Germany’s 1und1 has struggled with 5G deployment and customer migration, further emphasizing the difficulties new entrants face.
Despite Iliad’s relative success, it has yet to turn a profit, underscoring the long-term financial challenges of entering and sustaining a foothold in competitive markets.
With limited success stories and continued difficulties for fourth market entrants, the trend toward a three-operator market seems inevitable, Stefano Porto Bonacci said. By 2025, most Europeans will likely have only three major MNOs to choose from, with MVNOs offering limited alternatives to budget-conscious consumers.
Baburajan Kizhakedath
