The commission now has 90 working days to take a decision on the proposed Orange-MasMovil merger
The European Commission has opened an in-depth investigation to assess the proposed merger by Spanish carriers Orange and MasMovil. In a statement, the European body noted that it is concerned that the transaction may reduce competition in the domestic mobile and fixed broadband market.
“Orange and MasMovil are the second and fourth largest operators active at retail and wholesale level for fixed broadband and mobile services in Spain. There are in total four mobile network operators active in Spain and there are also several mobile and fixed virtual network operators which use the network operators’ infrastructure to offer mobile and fixed telecoms services to their consumers,” the commission said.
The commission initially found that the transaction “would reduce the number of network operators in Spain, thereby eliminating an innovative and significant rival.” The body also noted that this could lead to higher prices and lower quality of telecom services for customers.
“As result of the transaction, Orange and MasMovil would have the ability and incentive to restrict access of virtual operators to wholesale mobile network and wholesale fixed network access services. This could reduce the ability of such operators to compete, and in turn lead to higher prices and lower quality of services for end customers in Spain,” the commission said.
The commission said it will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether its initial competition concerns are confirmed.
The European Commission was notified of the proposed transaction on February 13, 2023. The commission now has 90 working days to take a decision.
Orange and MásMóvil had previously claimed that the merger will not mean a reduction in the number of network operators in Spain, since there are at least eight companies that offer fixed-mobile services in the domestic market.
In July last year, Orange and Masmovil signed a binding agreement to combine their operations in Spain. The telcos had started negotiations in March 2022. The transaction is based on an enterprise value of 18.6 billion euros ($19.6 billion).
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.
Orange has already deployed its 5G services in 1,844 towns and cities in 52 provinces across Spain. The telco’s 5G network infrastructure reached 78.4% of the Spanish population as of the end of the last quarter of 2022.
Orange recently said it expects to reach 11 cities with 5G Standalone (SA) by the end of the year. Orange Spain launched its 5G SA network in February, initially covering parts of Madrid, Barcelona, Valencia and Seville.
Meanwhile, Masmovil is currently offering 5G service in 1,660 towns and cities in 51 provinces across Spain for the customers of its Yoigo brand. According to the operator, 74% of the Spanish’s population is already covered with its 5G network infrastructure.
