European leaders are facing increasing pressure to bolster the continent’s economic competitiveness and technological independence. A report commissioned by the European Union, led by economist and former Italian Prime Minister Mario Draghi, warns that maintaining Europe’s current standard of living requires an urgent plan to improve productivity, innovation, and strategic autonomy – specifically to prevent further divergence from the United States and China.
The Need for a Unified Approach
The Draghi report highlights a growing gap between Europe and global technological leaders. A separate report by Enrico Letta emphasizes the need for deeper integration within the EU’s single market, particularly in sectors like energy, telecommunications, and financial services, to stimulate growth. Mac Murtra, president of Telefónica, stated, “We want to help make what those reports say possible.”
Telefónica’s Strategic Shift
Telefónica is responding to these challenges by prioritizing investment in artificial intelligence (AI) and cybersecurity, while simultaneously reducing its dividend by 50% for 2026. Murtra emphasized the current technological landscape, noting that “none of the ten most important technology companies in the world are European.” He further stated that all cybersecurity products used in Europe are currently sourced from American or Israeli companies, and that AI development is dominated by China and the United States.
Consolidation and Competition
Murtra warned that Europe risks becoming a “digital colony” if it fails to adapt. He proposes that Telefónica could become a leading European technology company, fueled by AI and cybersecurity. A key component of this strategy, he argues, is addressing the fragmentation of the European telecommunications market. “In the United States there are three telecommunications companies. In China there are three telecommunications companies. In India there are three telecommunications companies. How many telecommunications companies do we have in Europe? 38,” Murtra stated.
Restructuring and Future Investment
Reducing the number of telecommunications companies would allow firms like Telefónica to invest more in next-generation technologies and infrastructure. Murtra believes that even a reduction from four to three operators per country would unlock significant efficiencies. Telefónica is also undergoing a restructuring process, including a workforce reduction of over 5,000 employees, primarily through voluntary departures, though approximately 160 forced redundancies are anticipated in international divisions.
State Involvement and “Recycling” Business Units
Murtra also defended the role of state involvement in strategic telecommunications companies, pointing to significant ownership stakes held by France and Italy in their national providers. He argued that telecommunications are a critical infrastructure requiring institutional protection. The company is also focused on “recycling” outdated business areas, acknowledging the need to move away from obsolete technologies and invest in future-proof solutions.
Frequently Asked Questions
What is the Draghi report warning about?
The Draghi report warns that if the EU wants to maintain its current standard of living, it must urgently improve its productivity, innovation, and strategic autonomy to avoid falling behind the United States and China.
What is Telefónica’s new strategic focus?
Telefónica is prioritizing investment in artificial intelligence (AI) and cybersecurity, while reducing its dividend to free up capital for these areas.
What is Murtra’s view on the number of telecommunications companies in Europe?
Murtra believes that the large number of telecommunications companies in Europe (38) hinders investment and innovation, and that consolidation is necessary to improve competitiveness.
As Europe navigates these challenges, what role will strategic investment and market consolidation play in securing its future technological and economic independence?
