During the presentation of Orange’s annual results, the French operator announced its determination to consolidate the Spanish telecom market. In a statement published on March 8, 2022, the firm announced that it had entered into exclusive negotiations with its Spanish competitor MasMovil with the aim of merging their operations in Spain.
Orange enters into negotiations with MasMovil to relaunch its dynamic in Spain
In 2021, Orange’s revenue in Spain fell (by 4.7%), for the second consecutive year. Its operating margin fell by 12.7% and the firm recorded a depreciation of 3.7 billion euros of its assets in the country.
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This is why Orange has decided to consolidate this market which is at half mast, and has just entered into negotiations with the Spanish operator MasMovil. The latter has more than 14 million customers in Spain and bought Euskaltel in 2021, one of its former competitors in Spain, for the sum of 2 billion euros.
This merger should take the form of a joint venture, controlled equally by Orange and Masmovil. The enterprise value should reach 19.6 billion euros including 8.1 billion for Orange Spain and 11.5 billion for Masmovil. This joint venture would weigh nearly 7.5 billion euros in turnover.
Strengthening Orange’s presence in Spain is one of the brand’s priorities, along with the formalization of the shutdown of 2G/3G and the copper network in France.
Orange/MasMovil negotiations which should lead to the creation of a joint venture
By getting closer to Masmovil, Orange considers that it will be able to generate synergies of an annual amount of more than 450 million euros from the third year following the completion of the transaction.
” The creation of this Joint Venture with MasMovil is very good news. Our draft agreement builds on an already existing fruitful cooperation, aiming to create a larger player with the necessary resources to make the investments required for the development of the Spanish market. said Stéphane Richard, CEO of Orange. Masmovil’s CEO, Meinard Spenger, considers that ” the combination of ORANGE and MASMOVIL would benefit consumers, the telecommunications sector and Spanish society as a whole “.
The transaction is expected to be signed by the second quarter of 2022 and finalized by the second quarter of 2023, subject in particular to the approval of the competent administrative, regulatory and competition authorities.