Orange will have to show its credentials in Brussels if it wants to complete the merger of its Spanish branch with MasMovil. Indeed, the operation is closely followed by the European authorities, who have decided to launch an in-depth investigation into this marriage on the other side of the Pyrenees this Monday, April 3. The European Commission is concerned about the competition problems that such a union could cause on the Spanish market.
The merger between Orange and MasMovil in Spain was announced in the summer of 2022, with the transaction expected to be finalized in the second half of 2023. In this context, the alliance between the two operators must take the form of a joint venture held equally between the two operators, but the French group led by Christel Heydemann has already planned a mechanism to take control when the time comes. This new entity would be valued at 18.6 billion euros, which would make it a new telecoms giant on the Spanish market, with more than 20 million mobile subscribers and more than 7 million fixed customers.
Verdict expected this summer
But from the announcement of this merger, its success did not seem guaranteed, while Brussels takes a dim view of the reduction in the number of operators, because considering that this concentration is to the detriment of the consumer due to the increase in price it is likely to engender. These reservations were confirmed by the European Commission on Monday 3 April. “The operation would reduce the number of network operators in Spain, eliminating at the same time an innovative and important competitor. This could lead to higher prices and lower quality of telecommunications services for consumers”believes the European executive, which also judges that this could “restrict the access of virtual operators to wholesale mobile and fixed network access services”affecting de facto their ability “to compete”.
In this context, Brussels is giving itself until August 21 to decide on this vital issue for the survival of Orange on the Spanish market, where the French operator has experienced several difficult years due to a price war caused by strong competition. There is no doubt that the European Commission’s verdict will be carefully scrutinized by all European operators seeking consolidation in order to survive in an increasingly competitive telecoms market. In the event of a green light, the operation would make it possible to create a heavyweight in the Spanish market, capable of competing with Telefonica, the incumbent operator, and could lead to other similar operations on the Old Continent to accelerate the concentration of the sector.