Telekom Austria and KPN Wholesale Fiber Network a Sign of "Peak Telecom?"

Telekom Austria and Dutch group KPN have formed a new optical fiber wide area network linking 35 countries, and allowing Telekom Austria to use KPN's network for its customers in western Europe while KPN can use Telekom Austria's network in central and eastern Europe.

Under some circumstances, that would simply represent another bilateral deal between two carriers with complementary network assets. But one might argue we are not seeing normal circumstances in the European telecom market. 

Since about 2008, fixed network revenues have dipped about three percent annually, while mobile revenues have declined about eight percent annually. 

In other industries, such as the oil business, similar trends (declines)  have lead forecasters to talk about "peak oil" and the corollary, the decline of oil production. In Europe, one might wonder whether we already have seen "peak telecom."

If so, and if service providers cannot quickly figure out ways to reverse the revenue declines, mergers and acquisitions are inevitable, as that is one proven way to temporarily bolster declining revenues in a declining business.

It perhaps is noteworthy that the new deal links two firms in which Mexican telecom magnate Carols Slim has investments. The new fiber network is not necessarily an indication of what might happen in the future. But given Slim's obvious interest in becoming a player in European telecommunications, an eventual merger between KPN and Telekom Austria would not be out of the question. 

Both assets could play a role in Slim gaining a foothold in the lucrative German market.