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Orange rules out any interest in Euskaltel

Orange has ruled out acquiring regional Spanish cable operator Euskaltel in whole or in part, leading to an immediate fall in the share price of the latter.

Orange told Bloomberg that it had ruled out any type of transaction with Euskaltel, ending speculation that the company was looking to consolidate the regional player to extend its reach in the market.

Orange had earlier said that told markets regulator the CNMV that it did not plan to bid for 100% control of Euskaltel and that it was not currently analysing itself or with advisors a complete takeover of the company. The move followed reports that it had hired Credit Suisse to assist with a bid for the Basque Country-based cabler, which operates networks in the Basque Country, Asturias and Galicia and has unveiled plans to roll out in other Spanish regions using Orange’s network.

The latest denial of interest follows that of fourth-ranked Spanish telco MásMóvil, whose CEO Meinrad Spenger said he did not believe the acquisition of the company would create value for shareholders.

Lack of interest from the pair potentially leaves the way open for Zegona Communications, Euskaltel’s UK-based 15% shareholder, to move ahead with plans to acquire Euskaltel shares on the open market, increasing its stake and potentially its influence over the future direction of the company. Zegona successfully completed a £100 million (€114 million) share placing in January to finance the acquisition of Euskaltel shares.

Speculation about Orange’s interest in Euskaltel has been fuelled by the view that a combination of the pair would make strategic sense, preventing Euskaltel emerging as a competitive force nationally in Spanish telecoms as well as giving Orange a stronger reach in northern Spain.