Consolidation in the telecoms sector should be encouraged by the European Union (EU) to ensure higher levels of investment, argued former European Central Bank president Mario Draghi in a new report providing tips on keeping the continent’s economy competitive.  

Draghi, who is also the former prime minister of Italy, was asked to write a report on the state of Europe’s economy a year ago by European Commission (EC) president Ursala von der Leyen, who will now decide on which recommendations to adopt.

The 69-page document covers a range of areas including the ICT skills gap between Europe and the US, productivity challenges and the bloc’s industrial strategy.

In a section on telecoms, Draghi wrote facilitating consolidation in the sector is needed to deliver higher rates of investment in connectivity, while adding that innovation and investment commitments should be considered when assessing possible mergers.

Indeed, operators have long argued the case for in-market consolidation as a way to achieve scale. Pan-European consolidation, which has been pushed by the EC, is less popular among operators due to differing market dynamics and regulations.

Draghi wrote: “The cornerstone initiative is modifying the EU’s stance towards scale and consolidation of telecoms operators to deliver a true single market, without sacrificing consumer welfare and quality of service.”

Among his recommendations, he said consolidation should be encouraged by defining telecoms markets at EU level, as opposed to the Member State level, while suggesting a similar approach should be adopted for spectrum licensing rules. He also stated there should be less focus on blocking in-country consolidation, with more of a harder line adopted on mergers where companies are abusing a dominant position.

The economist also called for an “EU-level body with public-private participation” to develop homogenous technical standards for the deployment of network APIs and edge computing, “as was the case for roaming in the 1990s”.