Orange Spain and MásMóvil to merge

Orange and MásMóvil have signed an agreement to combine their operations in Spain, following the exclusive negotiations that began in March.

The €18.6 billion deal, which values Orange España at €7.8 and MásMóvil at €10.9 billion, is subject to regulatory approval and is expected to close during the second half of 2023 at the latest.

The merger will take the form of a 50-50 joint with equal governance rights.

The agreement also includes a right to trigger an IPO under certain conditions for both parties after a defined period and, in such a scenario, an option for Orange to take control of the combined entity at IPO price.

The pair said that the joint venture will create a sustainable player with the financial capacity and scale to continue investing in infrastructure in Spain.

The parties have identified potential synergies in excess of €450 million per annum to be reached by the fourth year post-closing

Christel Heydemann, CEO of Orange, said: “I am very happy to announce the conclusion of these negotiations today. This deal paves the way for the creation of a joint company that combines the forces of Orange and MásMóvil into a single, stronger operator that will enable investments in 5G and Fiber, benefiting customers across Spain. I strongly believe that the creation of this new company is of fundamental importance for the Group, the Spanish telecoms market and for our customers.”

Meinrad Spenger, CEO of MásMóvil, said: “This is a great day for Spanish consumers as well as for our stakeholders. Together with Orange, we plan to form a strong operator with a sustainable business model and the capacity to invest in world-class infrastructure, technology and talent. We anticipate this will drive competition, digitisation, and innovation in the Spanish market.”

The merger will take on a new number two player to challenge Telefónica in the broadband, mobile and TV markets, and leaves third-placed Vodafone without a likely merger partner.

The main players in the Spanish telecoms market have suffered from intense price competition. While the merger should in theory lead to a more rational pricing environment, with three major operators, Spain continues to be a target for disruptors. Romania based Digi is now an active player in the broadband and mobile markets, with a price-competitive offering.