By The European Union has conditionally approved the merger between Orange’s Spanish business and its rival MasMovil. This deal is anticipated to create a company with a total value of 18.6 billion euros, which includes debt.
Compliance with Commitments
The European Commission, acting as the antitrust enforcer of the EU, granted its approval based on certain commitments made by both parties. These commitments were established after initial concerns were raised last year regarding the potential impact on competition. With the revised terms of the transaction, the commission no longer sees a threat to fair competition.
Clearing a Major Hurdle
The approval marks a significant milestone for Orange and MasMovil, who faced scrutiny over how the merger could impact the telecom market. Industry analysts viewed this deal as a litmus test for the EU’s approach to M&A activities that reduce the number of players in a national market.
Plans for Closing
Both Orange and MasMovil have expressed satisfaction with the decision and are aiming to finalize the merger by the end of the first quarter. To address competition concerns, the companies have agreed to sell telecommunication spectrum to Digi Communications in Romania and provide an option for Digi to establish a national wholesale agreement.
Competitive Landscape
Acknowledging the competitive environment in the Spanish telecom sector, Orange and MasMovil affirm that the remedies offered align with supporting an existing player. The EU’s decision reflects a balanced approach to fostering competition while allowing for strategic growth opportunities.
Orange and MasMovil Merge to Create Spain’s Largest Telecom Operator
Orange and MasMovil announced in July 2022 their decision to combine their Spanish operations, forming the largest telecom operator in the country based on customer numbers. Prior to the merger, Orange and MasMovil held the positions of the second and fourth largest providers of retail mobile and fixed internet services in Spain, as reported by the EU.
Financial Impact
The combined entity is projected to generate annual revenue exceeding EUR7.4 billion, with earnings before interest, taxes, depreciation, and amortization after leases surpassing EUR2.3 billion, according to statements from the companies involved.
EU Investigation
Last year in April, the European Union initiated a thorough investigation into the merger. By June, a formal step, known as a statement of objections, was issued. The initial viewpoint was that the proposed consolidation could potentially reduce competition and result in price hikes.
Competition Concerns Addressed
Margrethe Vestager, the executive vice-president of the European Commission overseeing competition policy, expressed confidence that the commitments made by Orange and MasMovil would enable Digi, Spain’s leading and fastest-growing mobile virtual network operator, to maintain strong competitive pressure akin to that exerted by MasMovil.
For more information, contact Adria Calatayud.
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