# Telecoms mega-mergers: innovative or stifling? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-03-22 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: Are Telecoms Mega-Mergers Killing Innovation? Meta Description: Discover the impact of telecom mega-mergers on innovation and competition in the industry. Will these mergers hinder progress or drive the sector forward? URL: https://financedigest.com/telecoms-mega-mergers-innovative-or-stiflinghtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/business-woman-group-with-headsets-sbi-300840017-1736815947057-compressed.jpg) By **Sara Rasmussen,** COO of Telness Tech Mergers aren’t new – yet, in recent months telecoms mega-mergers have been hitting the headlines. Vodafone have joined forces with Three to take over the UK, and Orange and Masmovil have formed an alliance to dominate the market in Europe. And whilst the [big players are inevitably claiming this is a positive](https://www.financedigest.com/pimco-cut-big-position-in-russia-cds-by-adding-bonds-in-q2.html "PIMCO cut big position in Russia CDS by adding bonds in Q2") step for innovation, are mergers going to allow the telecoms industry to thrive, or could this stop innovation and progress in its tracks? **The [industry’s innovation](https://www.financedigest.com/macron-unveils-30-billion-euro-plan-for-innovation-and-industrial-revival.html "Macron unveils 30-billion euro plan for innovation and industrial revival") outage** It’s no secret that the telecoms industry is massively lagging [behind as far as technology](https://www.financedigest.com/what-is-generative-ai-the-technology-behind-openais-chatgpt.html "What is Generative AI, the technology behind OpenAI’s ChatGPT?") is concerned. Big telco providers are [falling short by working off of legacy infrastructure that dates back](https://www.financedigest.com/euro-slips-back-below-parity-norwegian-krone-falls-on-planned-cbank-fx-purchases.html "Euro slips back below parity, Norwegian krone falls on planned cbank FX purchases"), in some cases, centuries. It’s expensive and [time consuming](https://www.financedigest.com/adapting-payments-to-reassure-consumers-and-safeguard-profitability-during-times-of-uncertainty.html "Adapting payments to reassure consumers and safeguard profitability during times of uncertainty") to develop new infrastructure. Bigger can sometimes mean better but mega mergers won’t necessarily translate directly into [digital transformation](https://www.financedigest.com/redefining-the-human-touch-with-data-driven-digital-transformation.html "Redefining the human touch with data-driven digital transformation"). In fact, our research shows that 64% of customers are likely to switch phone providers within the [next three years if telcos don’t invest](https://www.financedigest.com/cepsa-to-nearly-double-investments-over-next-3-years-as-profit-soars.html "Cepsa to nearly double investments over next 3 years as profit soars") and act to deliver new products and services. It’s difficult to overstate how sluggish the [industry has been to adopt new technology](https://www.financedigest.com/five-industries-benefiting-from-multi-carrier-sim-technology.html "Five Industries Benefiting from Multi-Carrier SIM Technology"). It has even taken legislative intervention from governments to get the revamp of the telecoms industry off the ground – such as the UK [government investing](https://www.financedigest.com/chinese-love-affair-with-manchester-property-to-strengthen-as-government-welcomes-new-investment.html "Chinese love affair with Manchester property to strengthen as government welcomes new investment") £28million to trial new uses of 5G to improve the industry. **A bleak future for 5G** Even with government funding and backing, it is still ultimately down to the telco providers to [push the industry](https://www.financedigest.com/eu-recovers-appetite-for-trade-in-green-industry-push.html "EU recovers appetite for trade in green industry push") into the digital age. Why is this relevant to mergers? Take Vodafone and Three as an example. Both large organisations, both working off of outdated [legacy infrastructure](https://www.financedigest.com/achieving-a-smooth-transition-from-legacy-infrastructure-to-hybrid-cloud.html "Achieving a Smooth Transition from Legacy Infrastructure to Hybrid Cloud"). That’s layers of systems, not to mention bureaucracy, that will take years to merge, [putting technology like 5G on the back](https://www.financedigest.com/putting-the-human-touch-back-into-banking-magazine.html "“Putting the human touch back into banking”-Magazine") burner. We’re seeing this already. Only this month EE, who merged with BT in November of last year, [announced they’re forgetting 5G and pooling](https://www.financedigest.com/pega-pool-announces-the-official-launch-of-its-eco-friendly-bitcoin-mining-pool.html "PEGA Pool Announces the Official Launch of Its Eco-friendly Bitcoin Mining Pool") their effort into creating a better 4G network. It’s true that older mobile devices aren’t necessarily equipped to manage with 5G – yet, this seems like an obvious move to [delay the process and mitigate attention from the rising pressures to speed along the industry](https://www.financedigest.com/german-industry-calls-for-delay-to-global-minimum-tax-bdi.html "German industry calls for delay to global minimum tax – BDI"). **Stamping out the little guy** Mergers don’t [mean new services, if anything they mean more of the same thing](https://www.financedigest.com/the-bank-of-things-bot-has-arrived-but-what-does-it-mean-for-banks-2.html "The Bank of Things (BoT) Has Arrived: But What Does It Mean for Banks?"). What they really do is stamp out competitors, and leave [little room in the market](https://www.financedigest.com/sterling-little-changed-after-mixed-labour-market-data.html "Sterling little changed after mixed labour market data") for new entrants. Vodafone, Three and Orange have been around for a long time and although they’re working from poor systems, crucially they have the [funds and ability to dominate the market](https://www.financedigest.com/market-turmoil-a-boon-for-trend-following-hedge-funds.html "Market turmoil a boon for trend-following hedge funds"). In the UK, Ofcom’s relaxation around mega-mergers [comes off the back](https://www.financedigest.com/twitter-asks-some-laid-off-workers-to-come-back-bloomberg-reports.html "Twitter asks some laid off workers to come back, Bloomberg reports") of claims that there are too many players in the market. However, ethically this raises some question marks. Equal opportunity is crucial to push forward the telecoms [industry and if a few companies in a market](https://www.financedigest.com/polyols-and-sorbitols-products-market-industry-research-segmentation-key-players-analysis-and-forecast-to-2029.html "Polyols and Sorbitols Products Market Industry Research, Segmentation, Key Players Analysis and Forecast to 2029") own the infrastructure, customer base and the relationship with the regulators, that opportunity for start ups to enter the market is gone. **How startups break through the noise** The [big opportunity here for challenger brands is to get ahead of the competition while the larger telcos are busy](https://www.financedigest.com/smishing-is-a-new-virus-plaguing-big-business-conversational-commerce-to-the-rescue.html "‘Smishing’ is a new ‘virus’ plaguing big business – Conversational Commerce to the rescue!") with merger processes and organisational restructuring. Whilst larger telcos may [pay little mind to government](https://www.financedigest.com/uk-trial-lawyers-to-end-strike-after-accepting-government-pay-offer.html "UK trial lawyers to end strike after accepting government pay offer") legislation and do the bare minimum, start ups can capitalise on the distraction of mergers to launch offerings that customers really want. But it’s not always [startups vs the big](https://www.financedigest.com/startups-spring-from-ashes-of-big-tech-purge.html "Startups spring from ashes of Big Tech purge") telcos. There is room for collaboration. In fact, for big telecom companies merging with similarly large-scale peers  – [collaborating with startups becomes an incredibly vital part of innovation](https://www.financedigest.com/how-innovation-and-collaboration-are-evolving-the-fight-against-financial-crime.html "How innovation and collaboration are evolving the fight against financial crime"). By partnering with or [investing in startups](https://www.financedigest.com/analysis-rocket-startups-face-adapt-or-die-moment-amid-investment-drought.html "Analysis-Rocket startups face adapt-or-die moment amid investment drought"), legacy players can stay relevant and hedge their bets for long term success. The startup benefits too, from the budgets and [resources of a big corporations](https://www.financedigest.com/hmrcs-newfound-status-as-preferential-creditor-on-corporate-failures-represents-another-potential-drain-on-the-resources-of-the-ppf.html "HMRC’s newfound status as preferential creditor on corporate failures represents another potential drain on the resources of the PPF"). However, that is where the partnership should end. Startups [need the freedom to innovate](https://www.financedigest.com/why-covid-has-increased-the-need-for-corporate-sustainability-innovation.html "Why COVID Has Increased the Need for Corporate Sustainability Innovation") – to try things and fail and then try something new. Bureaucracy associated with [big business](https://www.financedigest.com/how-china-became-big-business-for-twitter-from-blocking-to-blue-checks.html "How China became big business for Twitter, from blocking to blue checks") would only stifle that process. It is a difficult balance to strike but it is possible.  At [Telness Tech](https://telnesstech.com/) for example, we’re used to doing all of these things – competing and collaborating in order to deliver the products and services that customers expect. In short, mega-mergers on their own will do little to [drive innovation](https://www.financedigest.com/stupendous-innovation-to-drive-the-mycotoxin-binders-market.html "Stupendous Innovation To Drive The Mycotoxin Binders Market"). It’s only the most self-aware of the mega telecoms mergers that will know how scale can slow innovation and how to stop stagnation in its tracks. They’ll [know that startups are a vital part of delivering new services and products to end](https://www.financedigest.com/the-end-of-payments-as-we-know-it.html "The end of payments as we know it") customers and continue to look for new opportunities to partner, transform their infrastructure and continue to deliver for customers. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---