Spain approves merger to form new telecommunications giant
Published: Tuesday, Mar 12th 2024, 19:00
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The Spanish telecommunications market is highly competitive. Now two of the four biggest players are joining forces to gain more power. The new giant is estimated to be worth 18.6 billion euros.
The Spanish government has approved the merger of Orange España and MásMóvil to form the country's largest telecommunications group. This was announced by the Minister for Digital Transformation, José Luis Escrivá, in Madrid on Tuesday. This means that nothing stands in the way of the new giant with an estimated total company value of 18.6 billion euros, in which both parties will have an equal stake. The European Commission had already given the green light for the merger in February.
"The result of this merger is the leading provider in Spain with more than 30 million mobile customers as well as a good seven million broadband customers and more than two million television customers," Escrivá told journalists after the weekly cabinet meeting of the left-wing government. The project includes "an ambitious and medium-term industrial plan that provides for very strong investments" over the next few years.
IPO possible
The French Orange Group is contributing its entire Spanish business (Orange España) to the project. The merger is expected to be completed in this first quarter or at the beginning of the second quarter at the latest. An IPO of the new company is not ruled out. The headquarters and name of the new giant have not yet been announced.
There is fierce competition between (still) four main providers on the Spanish mobile telecommunications market. According to the national regulatory authority CNMC, the Movistar brand of the former monopolist Telefónica has had the largest market share to date with 27.1%. It was followed by Orange with just under 21.9%, Vodafone España with 21.6% and MásMóvil in fourth place with 20.3%.
Last fall, the British group Vodafone announced that it would sell its Spanish business to the London-based investment company Zegona Communications for a total of five billion euros. The deal is expected to be completed by the summer, subject to regulatory approvals. Following the "yes" from Brussels, Madrid's antitrust approval is still pending. The Vodafone brand is to be retained for up to ten years.
In addition to the Spanish business, Vodafone also wants to sell its Italian business to Swisscom. As was announced at the end of February, the Swiss company is prepared to fork out 8 billion for Vodafone Italy. Swisscom wants to merge Vodafone Italy with its own broadband subsidiary Fastweb. The merged company would thus become the second-largest telecoms provider in Italy. The deal could be completed before the end of this year.
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