YOU ARE AT:5GSpanish telcos Orange, Masmovil ink deal to merge their operations

Spanish telcos Orange, Masmovil ink deal to merge their operations

Orange said that the transaction is based on an enterprise value of 18.6 billion euros

Spanish mobile operators Orange and Masmovil have signed a binding agreement to combine their operations in Spain.

The telcos had started negotiations in early March of this year. The transaction is based on an enterprise value of 18.6 billion euros, including 7.8 billion euros for Orange Spain and 10.9 billion euros ($18.99 billion) for Masmovil.

The transaction is subject to approval from antitrust and other regulatory review and is expected to close during the second half of 2023.

Under the terms of the deal, the 50-50 joint venture stipulates that both operators will have equal governance rights in the combined entity. The agreement also includes a right to trigger an IPO under certain conditions for both parties after a defined period and, in such a scenario, an option for Orange to take control of the combined entity.

The operators noted that the new entity would lead to significant efficiency gains, allowing the combined company to accelerate investments in FTTH and 5G technologies.

The companies’ due diligence process conducted since March shows potential synergies in excess of 450 million euros per year to be reached by the fourth year post closing of the merger, according to the two operators.

Christel Heydemann, CEO of Orange, said: “This deal paves the way for the creation of a joint company that combines the forces of Orange and Masmovil into a single, stronger operator that will enable investments in 5G and fiber, benefiting customers across Spain. I strongly believe that the creation of this new company is of fundamental importance for the Group, the Spanish telecoms market and for our customers.”

“This is a great day for Spanish consumers as well as for our stakeholders. Together with Orange, we plan to form a strong operator with a sustainable business model and the capacity to invest in world-class infrastructure, technology and talent. We anticipate this will drive competition, digitization and innovation in the Spanish market,” said Meinrad Spenger, CEO of Masmovil.

Masmovil is currently offering 5G service in almost 900 towns and cities in 40 provinces across Spain for the customers of its Yoigo brand.

Orange is already offering 5G services in 840 towns and cities in 38 provinces across the country. According to the European operator, its 5G network infrastructure already reaches 58.6% of the Spanish population.

Orange had said it expects its 5G network to reach 1,500 localities by the end of this year.

In February, Orange announced its deployment of 5G in the 700 MHz band. 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.

According to the telco, 57% of the country’s population is already covered with its 5G network infrastructure. The operator also noted that it had reached 191 new towns and cities in its latest 5G expansion.

The carrier’s 5G service is being offered via a combination of its own infrastructure and an agreement with rival operator 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.