YOU ARE AT:5GOrange, Masmovil start negotiations to merger their operations in Spain

Orange, Masmovil start negotiations to merger their operations in Spain

Orange noted that the transaction is expected to be completed in the second quarter of 2023

Spanish operators Orange and Masmovil have announced the start of exclusive negotiations to merger their operations in the country.

In a release, Orange said that each carrier will own 50% of the new joint venture, which will have a valuation of 19.6 billion euros ($21.55 billion).  

The agreement between the two operators contemplates the right to launch a Public Offer for Sale (OPV) under certain conditions agreed by both parties and the right of Orange to take control and consolidate the resulting combined entity in the event of a Public Offer of Sale.

The JV would integrate the assets and equipment of both companies in Spain, including an ultra-fast fiber optic network with a presence throughout the national territory and a mobile network with national coverage.

This JV would generate synergies that could reach 450 million euros from the third year after the closing of the operation.

Orange noted that the transaction is expected to be signed during the second quarter of 2022 and should be completed in the second quarter of 2023, once the appropriate approvals are obtained from the relevant administrative, competition and regulatory authorities.

Stéphane Richard, President & CEO of Orange, said: “I am very pleased to create this joint venture with Masmovil , taking advantage of our long and successful collaboration to become a stronger competitor, capable of making the important investments necessary to fully develop the market.”

Meinrad Spenger, CEO of Masmovil, said: “To ensure leadership in fiber and 5G infrastructures as well as the provision of exceptional service in Spain, we need strong operators with sustainable business models. The combination of Orange and Masmovil would be beneficial for consumers, the telecommunications sector and Spanish society as a whole.”

Madison Galati, Telecoms Market Data & Intelligence Analyst at UK-based research firm GlobalData, said that the potential merger will significantly impact the highly competitive Spanish telecoms market by reducing overall competition and introducing a new market share leader.

“In the mobile market, the merger of Orange and Masmovil will result in the two operators moving from their third and fourth places, respectively, to a leading position. In 2021, the two operators had a leading combined market share of 42%. Furthermore, the combined total mobile service revenue would top the market with $4.3 billion in 2021, surpassing the previous market leader Movistar,” the analyst said.

Orange recently announced what it claims to be the largest deployment of 5G in the 700 MHz band in Spain. The European carrier said it will offer this technology progressively over the course of 2022 in more than 1,100 towns and cities, 820 of them having between 1,000 and 50,000 citizens.

Orange had said it expects its 5G network to reach 90% of the Spanish population by the end of 2022. The operator launched commercial 5G services in Spain in September of 2020, using equipment provided by Swedish vendor Ericsson.

In the last spectrum auction, Orange secured 2×10 megahertz in the 700 MHz band, which adds to the 110 megahertz in the 3.5 GHz band already owned by Orange. The company invested a total of 523 million euros in the acquisition of these frequencies.

Masmovil said its 5G service had reached 686 towns and cities in 40 provinces across Spain for the customers of its Yoigo brand, as of the end of 2021.

According to the telco, 54% of the country’s population is already covered with its 5G network infrastructure.

The carrier’s 5G service is being offered via a combination of its own infrastructure and an agreement with Orange. Masmovil currently has 80 megahertz of spectrum in the 3.5 GHz band for the provision of 5G.

ABOUT AUTHOR

Juan Pedro Tomás
Juan Pedro Tomás
Juan Pedro covers Global Carriers and Global Enterprise IoT. Prior to RCR, Juan Pedro worked for Business News Americas, covering telecoms and IT news in the Latin American markets. He also worked for Telecompaper as their Regional Editor for Latin America and Asia/Pacific. Juan Pedro has also contributed to Latin Trade magazine as the publication's correspondent in Argentina and with political risk consultancy firm Exclusive Analysis, writing reports and providing political and economic information from certain Latin American markets. He has a degree in International Relations and a master in Journalism and is married with two kids.

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