Tower Companies vs. Mergers in Mobile Networks

Tower companies own almost three quarters of the mobile telecom installations globally and continue to grow. The main driver of this change is linked to the reduction of capital expenditures by operators and the increasing sharing of infrastructure by tower companies that improves their assets' tenancy ratios. In this article we review the history of tower company introductions in European markets, and compare the operator financial outcomes, along with the cost of services and market concentration that consumers experience. We also compare the wave of mergers during the same period in Europe, as an alternative cost-saving approach. We find that mergers primarily help operators improve their financial positions and EBITDA margin by 8.6 percentage points while consumers face significantly more concentrated markets with fewer options. Tower companies reduce average revenues per user by 1.41-1.79 Euros as increased tenancy ratios are passed-through to consumers, helping operators reduce their capital expenditures. We provide policy and market recommendations based on these findings.