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The engagement lasted forever. Some nineteen months after the announcement of the union between Orange and MásMóvil, the European Commission has finally given its blessing. The French operator and its Hispanic counterpart can combine forces on the Spanish market. After the finalization of the operation which will take place before the end of the first quarter, the new group will serve more than 7.3 million customers in fixed telephony, more than 30 million in mobile and more than 2.2 million subscribers TV.
Financially, the joint venture, owned equally, will achieve an estimated turnover of more than 7.4 billion euros and an EBITDAaL (earnings before interest, taxes, depreciation and amortization) of more than 2.3 Billions of Euro’s. Valued at 18.6 billion euros, the new company should generate, from the fourth year, more than 450 million euros per year in “synergies”.
To obtain the green light from Brussels, the two operators had to make concessions. The conditions imposed will preserve a competitive telecommunications market in Spain, both in terms of price and quality, as well as in terms of the deployment of the 5G network, in the interest of consumers », indicated the European Commission according to AFP.
The European executive opened an investigation in April 2023 fearing that the merger of Orange and MásMóvil, respectively the second and fourth largest operator in the country, would distort competition by reducing the number of players on the Spanish market from four to three. Which would have led to possible “ substantial price increases » for consumers.
Romanian operator Digi strengthened
The “remedies” recommended by Brussels therefore consist of strengthening a new entrant, in this case Digi, a Romanian virtual operator (MVNO). Orange and MásMóvil notably had to commit to giving it certain frequencies so that it would be able to build its own mobile network.
Digi will also be able to benefit from a roaming agreement allowing it to use the Orange + MásMóvil network in addition, in order to cover the entire Spanish territory.
This agreement remains optional. The operator has the option of keeping its current provider, Telefonica, or moving to the last operator present in Spain, Vodafone.
Kick-off of a vast consolidation movement?
This authorization from the Commission could kick off a vast consolidation movement on the Old Continent. As the European executive itself points out in a white paper, which should be presented this Wednesday February 21, the European telecoms market is particularly fragmented.
Unlike other areas of the world, starting with the United States, around five mobile operators and more than a hundred fixed operators coexist within the European Union. Without critical mass and sufficient profitability, European players would struggle to cope with the investment package that awaits them to build the networks of the future.
The echoes recall that merger operations in Portugal (Vodafone/Nowo) and Denmark (Telia/Norlys) are also under study. Iliad, the parent company of Free, was on the other hand rejected for the second time by Vodafone in Italy which could prefer the Swiss Swisscom. This does not prevent its founder, Xavier Niel, from increasing, via his personal holding company, the acquisition of stakes in the capital of European operators.
On the other hand, maintaining four operators on Spanish soil made possible with the rise of Digi gives an indication for a possible consolidation of the French market. Despite the Altice group’s current difficulties and its desire to sell part of the capital of SFR, the scenario of a return to three operators seems to be ruled out by the European Commission.