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European Telecom Competitiveness at Risk, Warns Ericsson CEO

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In a stark warning delivered at a regional investment banking conference in Tallinn, Estonia, Ericsson CEO Börje Ekholm highlighted Europe’s precarious position in the global telecom arena. Emphasizing the urgent need for regulatory reform and innovation prioritization, Ekholm cautioned that Europe’s telecom industry is trailing far behind its counterparts in the US, China, and India.

Ekholm underscored the critical importance of scale for telecom operators, lamenting Europe’s subcritical market size compared to other regions. With an average of merely 4.4 million subscribers per operator in Europe, contrasted with figures of 95 million in the US, 300 million in India, and 400 million in China, Ekholm stressed the imperative for in-market consolidation.

The Ericsson CEO criticized Europe’s current regulatory framework, arguing that it stifles innovation and impedes industry investment in new technologies. He pointed out that while digital infrastructure investment in Europe lags significantly behind that of the USA, the continent must pivot its priorities to foster innovation and ensure economic prosperity.

Despite Ericsson’s recent workforce reductions in Sweden, Ekholm’s comments echo sentiments expressed across the telecom sector this year. European operators, including industry giants like Deutsche Telekom, Orange, Telefónica, and Vodafone, have raised concerns about the region’s telecom competitiveness.

New data from Dell’Oro revealed a decline in global telecom capital expenditure for the first time since 2017, driven by reduced 5G investments. Stefan Pongratz, Vice President and Analyst at Dell’Oro, highlighted operators’ constrained capex amid stagnant revenue growth, signaling a challenging outlook for the industry.

The industry’s struggle to monetize new technologies, such as 5G, further exacerbates the investment shortfall. With emerging opportunities like generative AI and edge computing unlikely to significantly boost revenues, the call for regulatory reform becomes more urgent.

Ericsson warned that Europe risks lagging behind in digital technology and innovation on the global stage unless it shifts its approach. The fragmented nature of the European communications service provider market coupled with regulatory prioritization over innovation stifles the region’s ability to compete with global leaders.

As Ekholm’s call for reform reverberates across the industry, the fate of Europe’s telecom sector hangs in the balance. Without swift action to prioritize innovation and streamline regulation, the continent risks relegation to the sidelines of the digital revolution.

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