Vodafone CEO Says Europe Needs Telecom Deals to Spur Investments

Vodafone Group Plc Chief Executive Officer Vittorio Colao said Europe’s phone carriers aren’t investing enough in new technologies because they struggle to make money, calling for more consolidation in the industry.

“Europe needs jobs and Europe needs investment,” Colao said at the Mobile World Congress in Barcelona today. “Our sector has basically reduced investment in the last five years, while in America investment has been going up by 75 percent.”

European customers use half of the mobile data and a fifth of the minutes, spending 40 percent less on wireless plans than their counterparts in the U.S., according to Colao, who is meeting with European Commissioner Neelie Kroes today as carriers discuss policy that could spur investment.

Telefonica SA’s German unit is likely to face objections from EU regulators over it’s 8.55 billion euro ($11.7 billion) bid for Royal KPN NV’s E-Plus, people familiar with the matter said this month. Other carriers have been watching the deal closely for signs that regulators might allow more mergers within countries that may help carriers recoup investments.

“Policymakers make sure that we think long term,” Colao said. “In general there is a need for consolidation Europe, which has been under-investing because returns have been lower than in other parts of the world.”

Spanish Takeover?

Vodafone has discussed a bid for Spanish cable provider Grupo Corporative ONO SA, people familiar with the Newbury, England-based company’s thinking have said. ONO snubbed the approach, moving in favor of an initial public offering.

Colao said today Vodafone is focusing on its joint broadband buildout in Spain with Orange SA, formerly known as France Telecom SA. He met with Orange yesterday and discussed a push for joining forces to build high-speed fiber connections in the country, he said.

“We are clearly interested in broadband in Spain, we are clearly into offering our own solutions,” Colao said.“We have a good agreement with France Telecom, and we will see if things will change.”

Vodafone started trading today for the first time after a stock consolidation following the $130 billion sale of its U.S. business to Verizon Communications Inc. The shares rose 1.7 percent to 248 pence at 1:24 p.m. in London, valuing the carrier at 65.6 billion pounds ($109 billion).

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