TELECOMMS and internet operators Orange and MásMóvil have announced a planned merger worth €18.6 billion, set to go ahead in the second half of 2023 at the latest.
Still subject to competition authority approval, the fusion will be a joint venture rather than a buyout or takeover – each company will participate 50-50 in management, and it is expected both brand names will continue.
Orange's head office on the La Finca industrial estate in the wealthy Madrid-region commuter town of Pozuelo de Alarcón
French phone giant Orange, which trades as EE in the UK and as Orange elsewhere in western Europe, will hold €7.8bn in capital, and MásMóvil – run by the British holding company Lorca JVCo – will own €10.9bn.
In a joint press release, the two corporations forecast that as a combination, they will see around €7.3bn in annual turnover and €2.2bn in net profits.
The companies say they will be able to benefit from economies of scale and in combining strategies, allowing them to speed up investment in FTTH and the 5G roll-out, 'which will benefit consumers in Spain'.
Their joint deal includes the right to launch a public share offer under 'certain conditions agreed upon by both parties' and 'after a set period of time'.
In this hypothetical scenario, Orange would have the option to buy out all or the majority of its trading partner's shares at their standard price, enabling it to take control of MásMóvil.
The due diligences under way since March this year have revealed a joint potential for growth of around €450 million per year after the fourth year of working together, and the transaction would be funded via a credit of €6.6bn.
Shareholders would not be required to contribute to the loan; rather, the reverse – this figure would include a payout of around €5.85bn to those who hold stakes in both Orange and MásMóvil.
The financing will come from a 'pool of banks', and will cover the existing liabilities of both firms, combining them together.
MásMóvil's CEO Meinrad Spenger says the merger with Orange would result in a 'very strong' network operator with a 'sustainable business model' and 'greater investment capacity' in infrastructure, technology and 'talent at worldwide level'.
The merger with Orange will provide ‘greater investment capacity’ for the two firms combined, according to MásMóvil's CEO Meinrad Spenger (photo: Blog.grupomasmovil.com)
Meanwhile, Orange's CEO, Christel Heydemann, says the merger would be 'of fundamental significance' for 'the company, the Spanish telecomms market and for our customers'.
News of the planned merger – which still needs to be analysed and signed off by the National Markets and Competition Commission (CNMC) – comes just days after MásMóvil announced the sale of 51% of its holding in Basque network operator Euskaltel.
This effectively covers Euskaltel's television network EKT Cable, which has been sold to Bidasoa Aggregator, a consortium of investors based in the Basque Country.
Bidasoa Aggregator comprises, among others, Asúa Inversiones, Beraunberri, Inveready and Onchena.
The sale was subject to a commitment to contribute to the fibre-optic roll-out across the regions served by the Euskaltel network – a total of 1.2 million homes in the Basque Country, Asturias and Galicia.
Holding company MásMóvil will still be in control of the fibre-optic trunk and transmission networks, which it continues to own.
The main aim was to pay off a bridging loan of around half a billion euros MásMóvil took out last summer to complete its acquisition of Euskaltel.
Euskaltel as a whole, despite being owned by different entities, will still operate as one company from the point of view of the end consumer, in terms of network providing and maintenance.
Customers whose provider is Euskaltel, MásMóvil, R, or Telecable will not see a change in their operator's brand name or contract conditions.
In other news relating to MásMóvil and Orange, the latter has announced its paid-for subscriber TV platform will now include Disney+, and also that it has signed a deal with insurance firm MAPFRE to retail private healthcare cover.
