Back in the bubble, for most European telecom operators, it was mega-billion dollar mergers that were seen as a quick if dirty way of expanding out of their home bases. Remember the $100 billion bid for Qwest by Deutsche Telekom? (Nacchio should have sold, instead of facing jail time, he would have been a hero!) But those days are gone, and now European telecom players are moving into each others’ territory, trying to get a piece of the fast growing Broadband access business. With VoIP and IPTV coming next, it is no surprise that the whole continent is bracing for pitched battles.
Despite all the hoopla, only 20% of European homes have broadband, a number likely to double by 2007, according to some analyst predictions. In other words, this is growth business. Telecom operators also don’t have much choice. The wireline revenues are vanishing, as consumers favor wireless as their primary voice connection. The only way to offset all that revenue loss: broadband. And since most European countries are not as big as say the US market, its easier to cross borders and start swiping customers. Telecom Italia has 4 million DSL users in Italy, but has managed to get 430,000 abroad. Telecom Italia, Deutsche Telekom and BT Group are seen as the most aggressive in their overseas moves, while France Telecom is slowly expanding into Spain, Poland and Britain. (No broadband version of Napoleonic wars yet between Britain and France as yet, but coming soon!)