Some commentators reckon the agreement will gain regulators’ favour, allowing the proposed merger to go ahead, finally
Commentators reckon the agreement should be viewed favourably by European regulators and allow the proposed merger to go ahead, finally
Orange and Spain’s MásMóvil have moved to smooth the path to their €18.7 billion plan to merge their Spanish opcos, signing a deal to sell some assets to Romania’s Digi Communications, according to reports including from Bloomberg. However, the deal is non-binding.
The two agreed to merge their opcos in Spain in July 2022 but the European Union expressed concerns reducing the number of operators in the country would threaten competition and increase prices to consumers – which is exactly what every regulator always says when consolidation is in the offing, pretty much regardless of particular circumstances, such as those in Spain where all the operators are struggling to make a profit.
Earlier this year, Vodafone Group’s CEO, said “the [Spanish] market has been challenging with structurally low returns,” and certainly it has been a drag on Vodafone’s European performance.
Remedies to regulators’ ills
In June this year, the European Commission finally got round to outlining some remedies to lessen that perceived threat of the Orange merger with MasMovil.
In October, Orange and MásMóvil said they had decided to address fulfil these remedies by offering to sell the appropriate assets to Digi. At that point, Reuters reported the assets included spectrum, a consumer unit and a brand, and offer Digi access to infrastructure.
Now the deal has been agreed with Digi in principle, there are no details about the assets involved, but spectrum is very likely to be included, given the Commission’s guidance.
It is unknown if the Commission’s thinking will be affected by the announcement at the end of October that Vodafone Spain is to sell its opco to the British investment group Zegona for up to €5 billion. Vodafone Spain had itself reportedly been mulling a merger with MasMovil, but Orange pipped it at the post.
Digi has a presence in Spain as an MVNO, running on Telefónica’s network. In September its CEO, Marius Varzaru, told El Mundo, the Spanish newspaper, that it would invest €2 billion and create some 1,500 jobs if it is granted access to the assets released by the merger. At the end of June, Digi had more than 5.7 million customers in Spain.
Digi Spain had already signed a deal with infrastructure investor abrdn to build a €300 million FTTH network in the south of the country in May.
Image: courtesy of Digi Spain’s website