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Orange and Masmovil received Spain’s blessing for their merger
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The merger will create Spain’s largest operator by market share
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Consolidation of Europe’s telecom market was a key theme at MWC Barcelona 2024
Orange and Masmovil have just over two weeks left if they are to achieve their goal of merging their respective Spanish operations by the end of the first quarter of 2024. This week, the two groups overcame the last remaining regulatory hurdle after Spain’s government also gave its blessing to the deal.
The move comes about three weeks after the merger was approved by the European Commission following a protracted in-depth investigation. The commission’s eventual decision to green light the deal was primarily owing to a package of measures or remedies that Orange-Masmovil agreed in December with Digi Communications.
Merger of equals
In a statement, the Spanish government’s Council of Ministers said it approved the “merger between equals” that will create Spain’s largest operator by market share, with more than 30 million mobile customers, over 7 million broadband customers, and more than 2 million TV customers.
Government officials were clearly persuaded by Orange-Masmovil commitments to “make large investments in fixed and mobile infrastructure, which could not be achieved on such a scale without the proposed operation.”
Importantly, the future joint venture will also be permitted to take over the spectrum concessions currently held separately by Orange Spain and Masmovil. However, the new entity will then exceed the spectrum cap for a single operator, meaning it will have five months from the close of transaction to offload any surplus frequencies.
As part of the merger remedies, Orange and Masmovil have already committed to sell 60 GHz of spectrum held by Masmovil to Digi across three frequency spectrum bands (1,800 MHz, 2,100 MHz and 3.5 GHz), to allow current MVNO Digi Spain to build its own mobile network.
M&A in the spotlight
Consolidation of Europe’s telecoms market was a key theme at MWC Barcelona 2024, with renewed pleas by the CEOs of the four biggest telco groups for EU merger regulations to be eased.
Speaking during a keynote, Orange Group CEO Christel Heydemann insisted that the Orange-Masmovil merger will not adversely affect competition in Spain because the two operators will be in a better position to compete with current market leader Telefónica and Vodafone Spain.
“We’re going to have more scale and ability to invest in the network,” she said. Currently, Orange is “lagging behind Telefonica in terms of 5G rollout and … because we’re going to merge with Masmovil, we’re going to be able to continue to invest in fiber … 5G … [and] customers in Spain, and to compete based on scalable infrastructures.”
Meanwhile, Margherita Della Valle, the CEO of Vodafone Group, is currently juggling a number of M&A deals including in Spain, where the group has agreed to sell its operations to Zegona. This transaction is expected to close in the first half of the 2024 calendar year.
In addition, Vodafone and CK Hutchison are attempting to merge their respective operations in the United Kingdom, although this transaction falls under the remit of the U.K.’s Competition and Markets Authority (CMA) and not the European Commission. In January 2024, both parties notified the CMA of their intention to merge Vodafone UK with Three UK, triggering phase one of the authority’s investigation.
Vodafone has also confirmed it is in talks with Swisscom to potentially merge its Italian operations with Swisscom unit Fastweb. More should be revealed about the group’s plan for Italy in May.