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No Orange/MasMovil decision until 2024 despite Digi deal

Orange and MasMovil have reportedly inked a deal to sell assets to Digi in a bid to gain regulatory approval for their planned merger in Spain, but it's likely to be well into 2024 before Brussels comes to a final decision.

Mary Lennighan

December 1, 2023

3 Min Read
Orange Spain

Orange and MasMovil have reportedly inked a deal to sell assets to Digi in a bid to gain regulatory approval for their planned merger in Spain, but it's likely to be well into 2024 before Brussels comes to a final decision.

Reports of a preliminary deal were doing the rounds this week, in the newswires and the Spanish press. It's tempting to assume that such a deal will speed the operators towards their merger goal, but it's important to exercise caution here: there are still many issues to iron out.

Bloomberg's sources claimed that the telcos have struck a preliminary deal that could be signed by the end of the year, effectively bringing months of negotiations between to a close. It's a non-binding deal, they said, and added the usual caveat that it may yet come to nothing.

The newswire's sources had nothing to add on the content of the deal, other than that it covers the sale of assets, something widely believed to be one of the European Union's requirements in order to be able to approve the deal.

But Spain's The Objective, which also has knowledge of a deal between Orange/MasMovil and Digi, adds that the transaction will cover the transfer of network assets and mobile spectrum that MasMovil inherited when Telia's Yoigo exited the market in 2016. The assets in question would help Digi to build out its own mobile network, serving as a starting point for eventual nationwide coverage.

That's what the EU more than likely wants. There has been endless speculation in the 16 months since Orange and MasMovil announced their merger plan over whether Brussels has softened its stance on facilities-based competition; essentially, will it allow European mobile markets to drop to three network operators from four? The European Commission has blocked such mergers before – Three's planned takeover of O2 in the UK almost eight years ago, for example – and despite the industry making a good case for change, it seems likely it will continue to insist on four-player markets.

The reported deal between Orange/MasMovil and Digi – which may also include a fixed networks element, The Objective notes – would tick that box. But as the paper points out, there are other telecoms operators in Spain that could fulfil such a brief.

It highlights rural fibre operator Avatel in particular, which it says may also have reached a similar preliminary deal with Orange and MasMovil. Avatel declined to comment though.

Any and all deals will hinge on the outcome of deliberations at the European Commission, of course. We had expected to have a decision by now – an approval subject to very stringent remedies being the most likely outcome – but the Commission stopped the clock on the procedure in July, asking for more information.

Orange and MasMovil should now be able to present a new proposal to Brussels, including competition remedies, which will open a new phase of negotiations and re-activate the clock, at which point the Commission will have 50 days to respond, the paper explained.

That means January or February 2024 will likely be the soonest we will hear anything, which in turn pushes back the completion of the tie-up, should it get the green light, to later in the year. The telcos initially said they aimed to close the deal in the second half of 2023 at the latest; it looks like they will miss that deadline by some margin.

It will be worth the wait if they can get the European Commission onside. But even with deals in the bag with the likes of Digi and possibly Avatel, there is no guarantee of a favourable outcome.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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