With a multi-billion dollar merger in Spain, the telecom groups Orange and MasMovil are taking the consequences of the fierce competition between the four providers so far. The French group Orange and its Spanish partner MasMovil announced on Saturday that both parties would participate equally in the new company worth 18.6 billion euros. The French company contributes its Spanish operations.
The two groups had already announced talks in March about merging their Spanish businesses. These negotiations have now resulted in a binding agreement. However, the project still requires approval from the competition authorities of the European Commission, which is typically critical of such mergers. The companies said the transaction is expected to close by the first half of next year.
According to Orange, it has a pre-emptive right to the shares in the planned joint venture of MasMovil. In the longer term, an IPO for the new company is also possible. In the proposed merger, Orange’s Spanish operations are valued at €7.8 billion and MasMovil’s at €10.9 billion. The joint turnover amounts to more than 7.3 billion euros, the company profits add up to more than 2.2 billion euros. Orange’s main shareholder is the French state, which owns 23 percent of the shares. MasMovil is largely owned by financial investors KKR, Providence and Cinven.
Stand up for market leader Telefonica
The merger will create a new giant for fixed and mobile communications in the fourth largest EU country in terms of population, competing with the previous market leader and original monopolist Telefonica. The British provider Vodafone would slip to fourth place in Spain. However, according to industry experts, it, like its competitors, could benefit from an easing of the price war. According to the regulatory body, Movistar has a 28 percent share of the Spanish mobile communications market, Orange 23 percent, Vodafone 22 percent and MasMovil 21 percent.
The industry is eagerly awaiting
Bitter price battles, high debt mountains and billions of investments in the 5G expansion are causing problems for telecom companies across Europe. For this reason, the industry is increasingly thinking of consolidation. Analysts also consider mergers in Italy, Portugal and Great Britain possible. As a result of antitrust hurdles, the entire industry should now be anxiously awaiting how the European Commission will respond to Orange and MasMovil’s plans in Spain.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
