You wait for a telecoms merger to arrive, and then two come along at once. Last month, the European Commission (EC) approved two carrier mergers in the same week.

First, the EC cleared the proposed Swisscom acquisition of Vodafone in Italy, before it also approved UAE-based e&'s acquisition of the majority of eastern European operator PPF Telecom's business.

The Commission also approved Orange and MásMóvil’s merger in Spain earlier this year, consolidating the number of carriers in the market from four to three.

However, the approval of these deals hasn’t always been a given, as Three and O2 will tell you after the EU blocked their proposed deal back in 2016.

So what does the trend in approvals tell us about the Commission’s stance on mergers?

European Commission
Two mergers were cleared in the same week in September. Does the EC see the value in market consolidation for the telco industry? – dimitrisvetsikas1969 / 15115 images

Are they listening to the telcos?

Well, maybe the Commission is listening to the telecom companies and, in some instances, governments.

Carriers appear to be more intent on market consolidation than ever and, only a week or so before the two mergers were approved, the former European Central Bank president and former Prime Minister of Italy, Mario Draghi, said that mergers should be viewed more favorably by the EU than is currently the case.

Draghi said competition should be "more forward-looking rather than prudential,” noting that regulators need to soften their stance when mergers are proposed.

Whether the EC paid any attention to the report or indeed Draghi’s comments when deciding the outcome of the two previously mentioned mergers is another matter.

One thing that cannot be ignored however, is the appetite from those within the industry to seek M&A opportunities, and you can expect this to continue.

The comments were welcomed by Jenny Lindqvist, senior vice president, head of Ericsson Europe & Latin America, who said Draghi’s input was a "timely call to action," as AI technologies begin to emerge. But such technologies come at a cost, as we hear all too often.

Regulators have a job to do

In Draghi’s opinion, regulators should spend less time blocking country-level consolidation before there are competition issues.

He adds that only when companies are showing signs of abusing their dominance should they face scrutiny.

While the latter point is something that everybody wants to avoid, it’s difficult to see how exactly regulators can do both of these things.

Of course, nobody wants to see companies abuse their position and dominate markets, as that would be a disaster for consumers, and would relax pressure on incumbents if there’s less competition to keep them honest.

So, while telecom providers want regulators to relax their views on mergers, it’s in everyone’s best interests that these deals are heavily scrutinized.

Customers don’t want to end up paying higher prices, which is one of the main concerns when a merger is touted. There’s also a fear that telcos might rest on their laurels and won’t feel pushed to invest as much in their network investment.

For the record, I doubt that would ever be the case in most markets, especially given the significant investment that carriers are spending on their 5G networks or fiber rollouts, which are both essential for future technologies such as AI.

And that in itself is an argument for carriers as to why consolidation is necessary. A lot of telcos have said it’s just too expensive to keep investing in their network infrastructure alone. The demands and expectations from technologies such as AI will only exacerbate that.

Where does this leave Vodafone and Three’s merger in the UK?

Vodafone and Three are poised to discover the fate of their proposed merger in December, which was first announced more than two years ago.

The £15 billion ($19.5bn) merger is set to consolidate the UK’s telecoms market from four players to three.

That particular deal, which has dragged on for what feels like an eternity, won’t require the green light from the European Union, given the UK’s decision to leave the EU. That said, the EC has stated it has no qualms with the merger, which further suggests the view that the EU is softening its view on such mergers.

Instead, the UK’s Competition and Markets Authority (CMA) will have the final say on that deal, and has already outlined its concerns around competition.

Vodafone and Three have made their case for the deal to go ahead, claiming that it will create an improved 5G service for the UK. The CMA has said those claims are "overstated."

While there's still work to be done, according to industry analysts, the merger is largely anticipated to go through.

Vodafone
Vodafone has pushed heavily for its merger with Three to happen – Getty Images

Proof it can be done

Only time will tell as to whether three carriers or four, is the sweet spot for the telecoms industry.

A decade ago it would have been a tougher discussion to get off the ground, but some will argue that three is still an adequate amount of carriers to choose from.

T-Mobile will argue they can make a strong case for a three-market system, since their merger with Sprint. The carrier has been able to utilize its mid-band spectrum for its 5G rollout, which covers more of the US population at present than its rival telcos, Verizon and AT&T.

Vodafone and Three will be hoping their proposed union, should it go ahead, can do the same for its 5G coverage.