M&A transactions have become essential among expansion-minded telecom players in Europe as organic growth opportunities begin to evaporate.

While successful telecom M&A deals all share important similarities, specific acquisitions tend to rise or fall according to the unique calculus that governs individual companies.

Ideally, acquisitions should help operators address the major trends they face today. Important trends involve closing competitive cost gaps, capitalizing on big data, and dealing with cloud computing, among others.

Based on these trends, the M&A screening approach establishes a number of M&A “archetypes.” Typical archetypes identified include: fixed-mobile convergence; local mobile consolidation; local cable consolidation; and cross-border cable/mobile consolidation.

The higher the fixed-mobile convergence index, the less converged a respective market is from a fixed-mobile perspective, resulting in more deals between fixed and mobile operators as well as convergent pressure.

For telecom players interested in local mobile consolidation, focusing on markets with more than three players may enable companies to avoid potential regulatory constraints.

Huge differences exist across Europe in terms of cable penetration. A variety of markets still exhibit high numbers of smaller cable players, making it worthwhile for potential acquirers to analyze the underlying cable players in terms of number and market shares.

Companies pursuing cross-border consolidation seek out “white spots” globally where no multinational conglomerates currently operate, or find potential business plays among local providers.

While cost synergies are harder to obtain in a cross-border merger, high potential still exists, especially if companies choose to go beyond pure combinatorial measures.

These archetypes can explain why some companies maintain continuous discussions with their peers regarding potential M&A deals.

Regulation plays an unusually powerful role in the telecom industry, and its impact on M&A deals is no exception. One recent regulatory trend involves the increasing proportion of M&A deals approved with “conditions.”

For instance, the percentage of M&A deals approved in the EU with conditions increased from 8% during 2004-2010 to 31% during 2010-2016.

Spectrum divestment and network access are two key conditions often stipulated in telco mergers. Recently, the EU heavily objected to a particular mobile consolidation, with a planned four-to-three merger blocked on the EU level.

The EU commission can take steps that go beyond market share considerations. An example that applies directly to telecom players involves concerns that a merger would create a high degree of “substitutability.”