Consolidation as way to focus on a smaller footprint

Consolidation works on different levels. There is vertical and horizontal consolidation. As a result, the number of players in a certain geographic market can be reduced. But recent trends are more operator-centric: certain markets are sold to concentrate on a smaller footprint, in order to be able to carry a new investment (capex) round better - with the economy, regulation, extra-sector competition (i.e. OTT) and the rise of the NGN as catalysts.

This is what we have seen on several occasions recently:

• Vodafone pulling out of the US (Verizon Wireless) to invest in other regions (Project Spring).
• KPN pulling out of Germany (E-Plus). It remains to be seen where all this cash will go: to shareholders, to Belgium or to the Netherlands (with this kind of cash, KPN could even buy Ziggo and UPC NL to create a national infrastructure).
• AT&T pulling out of Connecticut (SNET) to focus on U-verse in 21 other states.

Multi-national telcos have been buying and selling a lot over the past few years (Tele2, UPC, Telefonica, Orange). We will see what will be next.