Orange SA’s Spanish subsidiary and Masmovil Ibercom SA have received conditional approval from the European Union for their ambitious plan to create Spain’s largest mobile operator.
The duo’s agreement to sell spectrum licenses to rival Digi Communications NV, and also provide an offer for wholesale roaming, have helped to quell the EU’s worries about heightened prices resulting from decreased market competition.
The deal, if passed, reduces the number of players in the market from four to three. This is usually a no go area for regulators.
Orange and Masmovil are Spain’s second and fourth-largest telecom operators, and will have a combined enterprise value of $20bn (€18.4bn) if the merger goes through. This new entity will surpass the former state monopoly, Telefonica SA.
Digi Communications NV had previously entered into a deal with Orange and Masmovil in December to acquire €120m worth of spectrum licenses. Additionally, Digi has the option to enter into a future wholesale agreement on Orange’s network.
While regulators maintain there is no fixed number of firms required in national phone markets, deals reducing competition to three players have often faced challenges in gaining approval.
Such situations have proved frustrating for companies seeking to expand operations across the 27-nation EU and recover substantial investments in infrastructure and wireless spectrum.
In 2023, the commission conducted an in-depth examination of Orange’s bid for a majority stake in Belgian peer Voo SA. The deal was passed after Orange provided a series of remedies that helped open up network infrastructure for its rivals.
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