Orange and MasMovil are in talks to form a 50:50 joint venture to combine their mobile network business operations in Spain — in a deal valued at €19.6 billion.
Orange has confirmed the development in a news statement. The entity will have 4.0+3.1 million fixed customers, 11.5+8.7 million contract mobile customers and close to 1.5 million TV customers in Spain, Orange said.

The joint venture would own network including a nationwide FTTH network reaching over 16 million homes. The combined entity would become a stronger market player with revenues of over €7.5 billion, EBITDAaL over €2.2 billion.

The news will be a setback to Vodafone, which had also been talking to parties in Spain about possible deals for its Spanish business.

Spain’s largest operator is Telefonica, followed by Orange, and Vodafone. MasMovil, the fourth biggest operator, was taken private in 2020 after a leveraged buyout by private equity groups KKR, Providence Equity Partners and Cinven, FT news report said.

The merger of Orange and MasMovil will result in the two operators moving from their third and fourth places, respectively, to a leading position. In 2021, the two operators had a leading combined market share of 42 percent.

The combined total mobile service revenue would top the market with $4.3 billion in 2021, surpassing the previous market leader Movistar. The two operators will be able to access each other’s Mobile Virtual Network Operators (MVNOs)/sub-brand mobile subscriber base which target various market segments as well as each other’s 5G mobile networks, GlobalData said.

The joint venture would hold a leading market share of 42 percent in the fixed internet market in 2021 and a second-place market share of 32 percent in the fixed voice market after Movistar. The companies will be able to leverage each other’s large fiber networks with the joint venture holding a leading 45 percent fiber market share in 2021.

“The potential merger is the latest in a slew of communications service providers (CSP) M&As that have been occurring in Europe in the last few years, with convergence-induced M&As, and expansion of fixed broadband footprint and market shares as key drivers, Sergej Gavrilov, Telecoms Market Data & Intelligence Senior Analyst at GlobalData, said.

MASMOVIL’s acquisition of Euskaltel in Spain in 2021 was driven by the company’s desire to expand its fixed broadband footprint, access MVNO/sub-brand mobile subscribers, accelerate 5G and fiber investment, and reduce market competition.