Europe’s Telecoms Face ‘Cruel’ Reality of Scale, GSMA Chief Warns

With a month to go before the twentieth Mobile World Congress kicks off in Barcelona, the telecommunications industry is facing a complex macroeconomic landscape, from a controversial new European law to cybersecurity mandates forcing out Chinese suppliers.

Vivek Badrinath, Director General of the GSMA, which organizes the event, laid out the challenges facing the sector, highlighting a significant competitive disadvantage for Europe. “It is clear that in Europe there is a problem of scale. The numbers are cruel,” Badrinath said from the association’s offices at the Fira de Barcelona.

He pointed to the stark contrast in 5G Standalone adoption, which is used by just 2% or 3% of customers in Europe. In the United States, that figure reaches 25%, while in China it exceeds 80%. “We are doing something wrong,” he added. “If you don’t see the benefits of 5G Standalone, you don’t see the real impact it allows, like digitizing ports or its use in factories.”

The root of the problem, Badrinath argued, is market fragmentation. “Compare: in the United States and China there are three profitable operators. In Europe there are about 100 operators. The lack of scale becomes a handicap. With 5 million customers you cannot invest the same as with 150 million.”

He urged regulators to reconsider their approach to mergers. “[Europe] needs to change the way they look at these agreements and approve more consolidations. We need to push towards consolidations and have giants that can speak on equal terms with the big American tech companies.” Without commenting on specific deals, he added, “to cover a country, the bigger you are, the better you can absorb this investment. I support the fact that there are fewer operators.”

Compounding the issue is the new Digital Networks Act, which Badrinath said leaves a bittersweet taste. While he praised some elements, such as indefinite spectrum licenses that provide long-term visibility, he lamented the law’s bureaucratic expansion. “One of the priorities of the Draghi Report was administrative simplification, and the new law does not go in that direction,” he said. “This is not the simplification we were promised.”

Another critical front is the new Cybersecurity Act, which effectively bans Chinese firms from critical infrastructure. “We believe that networks need to be secure, it is very important,” Badrinath acknowledged, but he cautioned against a rushed implementation. He argued that the risk associated with certain components is minimal and that the financial impact of a forced “rip and replace” policy needs careful evaluation. “It’s a lot of money. And we should, in doing this, avoid shooting ourselves in the foot when there is at least 200 billion in investment required.”

A more pragmatic approach, he suggested, would be to replace equipment as it reaches the end of its life cycle. “The time you spend doing this is time you don’t spend investing in your products.” While European suppliers like Nokia and Ericsson exist, he said the issue “is about pace and cost.”

Despite the headwinds, the MWC itself is on solid footing in Barcelona, with an agreement that runs until 2030. The upcoming event will showcase a broad range of technologies, including AI, satellites, drones, and quantum computing. “The MWC grows every year, it expands. It is not the mobile industry talking to itself,” Badrinath noted.

Addressing concerns that European technology firms like Nokia are increasingly focused on the U.S. market, Badrinath framed it as a sign of a healthy global industry. “We can’t complain that they are strong all over the world. On the contrary,” he said. “We would not be where we are if we did not have a billion Chinese and a billion Indians using mobile phones. Because that is what raised the volumes and lowered the prices.”