Europe’s 5G ambitions depend on scale, spectrum and simplification

By Joakim Reiter, Vodafone Group Chief External & Corporate Affairs Officer

Europe has set ambitious goals for its digital future. By the end of this decade, policymakers want seamless 5G coverage across the continent, resilient networks that support critical infrastructure, and connectivity capable of supporting AI, automation and new industrial value chains.

But there is a growing gap between this aspiration, and the sector’s ability to deliver it.

A new analysis published by GSMA Intelligence – Mobile Investment Needs In Europe – puts the challenge into stark relief.  To match the performance of leading global regions, Europe’s mobile networks need almost €475 billion in investment over the next decade.

On current forecasts, operators are expected to invest around €270 billion, leaving an investment gap of approximately €205 billion.

This is not a question of willingness. Since 2021, Europe’s mobile operators have invested more than €140 billion in their networks. 5G has been rolled out faster than any previous generation, with coverage expanded to the vast majority of citizens, and it has supported a rapid rise in data use, digital services and new business models.

Networks are stronger, businesses are more productive and public services are more resilient.

The transition to full 5G Standalone (5G SA) would amplify those gains further. Closing Europe’s investment gap would scale up a proven engine of productivity, competitiveness and long-term economic return.

Yet despite this, Europe no longer leads where it counts.

Annual capital expenditure per mobile connection in Europe is around €35 per year, compared with roughly €70 by the world’s connectivity leaders. The consequences are already visible in network quality, reliability and capability.

While 5G SA is already available to 80% of users in Greater China, and close to 50% in India, only about 2% of Europeans are currently connected to or using it. Without 5G SA, many high-value use cases such as ultra‑low latency services, network slicing, industrial automation and AI‑enabled applications will remain out of reach.

In relative terms, European operators already invest a high share of their revenues. The issue isn’t about willingness or effort, but that absolute investment levels remain structurally too low to deliver world‑class outcomes.

Closing the €205 billion investment gap identified by GSMA Intelligence requires breaking that cycle through regulatory reform.

The gap is not inevitable, either. It reflects deliberate policy choices. The Digital Networks Act and reform to merger guidelines offer Europe the chance to align its rules with its ambitions. The question is whether policymakers are prepared to take it.

The GSMA analysis points to three areas where policy choices can materially change Europe’s investment trajectory: scale, spectrum and simplification.

First, Europe must get serious about scale. 

In capital‑intensive infrastructure markets, scale really does matter. The evidence from across Europe shows a clear link between operator scale and investment levels. 

GSMA’s analysis finds that investment per operator is consistently higher in more consolidated markets, without compromising consumer outcomes. Fewer competitors doesn’t automatically mean better results, but it does suggest that persistent fragmentation carries a real investment cost.

Europe’s ongoing review of merger policy provides an opportunity to modernise decades‑old assumptions and make sustained investment viable, focussing on what really matters: network quality, innovation and resilience.

Second, spectrum policy must shift from revenue extraction to investment enablement.

Spectrum is a productivity input, not a tax base for the state. Yet European spectrum costs have nearly tripled as a share of revenues over the past decade, driven by high reserve prices, short licence durations and recurring fees.

On current trajectories, operators face more than €100 billion in spectrum‑related costs between 2025 and 2035. This is capital that cannot be invested in coverage, capacity or resilience.

GSMA modelling shows that low‑cost or free‑of‑charge spectrum licence renewals of existing could free up nearly €30 billion over the next decade. Removing annual fees could release a further €17 billion that could be redeployed directly into networks.

Europe’s spectrum framework must move towards a genuinely pro‑investment model based on very long or perpetual licences that renew by default to deliver predictable conditions over decades, matched with stronger coordination across Member States. Handled correctly and quickly, spectrum reform alone could materially narrow Europe’s investment gap.

Third, Europe must deliver genuine regulatory simplification.

Mobile operators in Europe grapple with more than 30 overlapping sets of sector‑specific and horizontal obligations. These range from quality of service, security, consumer protection and net neutrality, many of which pursue similar objectives through different instruments.

This duplication increases compliance costs, creates regulatory uncertainty and constrains business cases for long‑term investment. In practice, it also entrenches asymmetry, with similar services governed by different rules depending on whether they are delivered by network operators or other digital players. This adds complexity without improving consumer protection.

Simplification must result in clearer allocation of responsibility, fewer overlapping rules, and faster certainty at the point laws enter into force. Lowering the cost of doing business is one of the most powerful and least controversial ways to unlock investment.

If Europe supports scale through a realistic approach to market structure, resets spectrum policy around investment incentives, and delivers real simplification rather than consolidated complexity, it can begin to close its connectivity investment gap.