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For a business that has done so much to make people feel closer together mobile-phone operators have been wary about...

For a business that has done so much to make people feel closer together mobile-phone operators have been wary about extending the hand of friendship across borders. But as a new round of consolidation kicks off in Europe, America and elsewhere it seems that the world is getting smaller for the mobile-phone giants.

France Telecom admitted on June 5 that it had begun discussion with TeliaSonera about a8230; takeover offer for the Swedish firm8230;Verizon Wireless agreed to acquire Alltel in a 27 billion deal that would create America8217;s largest mobile company. This deal and potential tie-up are the latest of a flurry of activity among the world8217;s big mobile operators. In developed markets the prospects for growth are poor. So bulking up makes sense: with greater size comes the opportunity to cut costs and enjoy the economies of scale8230;

France Telecom cannot yet celebrate its foray abroad, which, if successful, would create Europe8217;s biggest mobile-phone company8230; Even if that deal falls through there are plenty of other possible tie-ups in the offing. Spain8217;s Telefonica and Britain8217;s Vodafone are both thought by some analysts to be on the hunt for acquisitions. Late last month India8217;s Reliance Communications said that it was in talks with South Africa8217;s MTN about a deal that would forge a firm8230; with a presence in India, Africa and the Middle East and with over 114m subscribers.

The current clamour to do deals is driven by the belief that bigger is better8230; Previously cross-border collaboration between mobile operators was accepted, but that was usually as far as it went. Governments in Europe and elsewhere are becoming less inclined to use the security concerns8230; to prevent certain types of businesses from coming together across borders8230; preventing foreign energy companies from gaining access to national markets has little bearing on energy security. Thus allowing mobile operators to fall to foreign predators is unlikely to compromise national security. So even if some the current set of proposed deals among mobile-phone operators fails to come to fruition it still looks likely that a round of consolidation is on the way.

Excerpted from an article in the Economist8217;s online edition