Europe's mobile network operators must invest nearly half a trillion euros over the next decade to upgrade networks to match global leaders, according to a new GSMA analysis. The report, 'Mobile investment needs in Europe' by GSMA Intelligence, indicates that €475 billion is required for best-in-class connectivity across the continent, but only about €270 billion is expected to be accessible to operators, leaving a €205 billion investment gap.
Europe's 5G Lag
Europe's digital capabilities continue to trail global standards. While standalone 5G—offering faster speeds, lower latency, and innovative services like network slicing—is available to 80% of the population in Greater China and nearly 50% in India, it reaches only 2% of Europeans. This disparity stems from more favorable investment conditions in other markets. Capital expenditure per connection in Europe is just €35 compared to €70 in leading global markets, hindering the bloc's ability to compete.
Revenue Decline Despite Usage Growth
Mobile internet usage has increased by an average of 27% annually since 2018, yet operator revenues have fallen by an average of 3% per year during the same period, further restricting investment capital. The financial burden largely falls on the industry, with operators funding 85% of network infrastructure investments.
Investment Needs and Gaps
The analysis updates the European Commission's 2023 research on Digital Decade targets, which estimated €174 billion to over €200 billion in digital investment needed by 2030. However, operators have already invested €141 billion since 2021 without meeting targets, and Europe trails further behind global 5G leaders. Of the €475 billion needed by 2035, only 57% is forecast to materialize. The €205 billion deficit includes:
- Half needed for 5G coverage along major transport routes (road, rail, waterways).
- €35 billion to extend 5G coverage to the entire European population.
- €38 billion for greater network resilience.
- €28 billion to underpin AI-based services and innovation.
Regulatory Reforms Required
To unlock the remaining 43% investment, the report proposes three regulatory reforms:
In-Market Consolidation
Since 2015, three-player markets in Europe have seen higher investment as a proportion of revenues and per connection compared to four-player markets, while improving service quality.
Effective Spectrum Management
Spectrum costs in Europe have nearly tripled over the past decade. Low-cost renewals could free up to €30 billion in capital, with over 500 licenses due for renewal by 2035. Indefinite licenses, as proposed in the EU's draft Digital Networks Act, would improve investment incentives.
Addressing Asymmetrical Regulation
Current regulations, including open internet access, net neutrality, the Cyber Resilience Act, and the European Electronic Communications Code, impose additional costs and limit revenue growth. A balanced relationship between mobile operators and other digital ecosystem players would encourage network investment.
Path Forward
Realigning Europe's investment environment through these reforms could double capital expenditure per connection over the next decade, matching levels in North America and East Asia. GSMA Director-General Vivek Badrinath stated: 'The numbers are clear: to support Europe's digital ambitions, nearly €0.5 trillion in mobile network investment is needed over the next ten years, with only half currently likely. Europe needs a pro-investment regulatory environment to secure its digital future and global competitiveness. Policymakers have opportunities through the Merger Guidelines review and the Digital Networks Act, but inaction is not an option.'
