As borrowing costs rise, JPM sees European telecoms consolidation accelerating

Telefonica SA

26/10/2026 09:39

** JPMorgan says higher borrowing costs are putting pressure on heavily indebted European telecom operators, increasing the likelihood of consolidation and further restructurings
** JPM says some smaller telecom operators are struggling to cope with higher interest costs after years of cheap financing, following a period of weaker competition and the 2025 default of French telecom operator SFR
** It downgrades Telefonica TEF.MC to "underweight" from "neutral" saying investors may be underestimating balance-sheet risks
** The broker also points to debt risks at Virgin Media O2, rising financing costs and the possibility it may need to raise capital to fund consolidation
** The broker sees BT BT.L as a beneficiary, adding that financial stress among rivals and BT's planned acquisition of TalkTalk assets should strengthen its position in the UK market

 (Reporting by Gemma Guasch)
 ((Gemma.guasch@thomsonreuters.com))