11 April 2022

Orange and MasMovil, the second and fourth largest operators in Spain, entered in to discussions to forge a 50:50 joint venture in the country.

The deal values Orange’s Spanish unit at €8.1bn and MasMovil’s at €11.5bn, creating a combined enterprise value of €19.6bn.

A new converged operator would have circa 7.1 million fixed line customers and 20.2 million mobile subscribers. Its combined FTTH network would reach over 16 million homes.

Furthermore, the operators say that the merger would generate a wealth of relevant synergies, valued at over €450m from the third year of operation post-closure.

“To assure leading telecom infrastructure in 5G and FTTH as well as outstanding service in Spain, we need strong operators with sustainable business models,” said Meinrad Spenger, chief executive officer, MasMovil.

“The combination of Orange and MasMovil would be beneficial for the consumers, the telecom sector and Spanish society as a whole.”

Moreover, the deal also includes a clause allowing for a potential initial public offering in future, with Orange having the right to buy a controlling share of the business at a fixed share price.

If merger goes ahead, the entity will be large enough to challenge hegemony of Telefónica. Spain’s third place player, Vodafone, had also previously been tied to merger talks with MasMovil.

All of Spain’s operators have been under increasing financial pressure in recent years, due in part to the expensive rollout of 5G and fibre. This has led to profit margins becoming slimmer.