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As one of the most competitive telecoms markets in Europe, many claim that Spain is long overdue telecoms consolidation – but who will merge with who?
Today, Spanish newspaper Expansion is reporting that Orange is in talks to merge its Spanish unit with that or rival group MasMovil, citing anonymous sources.
According to sources, the move would create a 50:50 joint venture, half of which would be held by Orange, with the remaining 50% held by Masmovil’s owners: KKR, Cinven, and Providence.
The trio of investment funds themselves took control of MasMovil back in 2020, each holding an equal stake in the business, having collectively bid around €3 billion.
The potential merger of Orange and MasMovil represents the combination of Spain’s second and fourth largest operators, with the resulting business a size to rival market leader Telefonica. Vodafone Spain, meanwhile, would be left in a somewhat distant third place.
However, it seems that this discussion is far from the only one taking place behind closed doors in this congested market and other combinations of Spain’s major telecoms operators that could be being considered.
Just last week, differing Spanish media were reporting that MasMovil had approached Vodafone with an offer to purchase their Spanish unit, with discussions reportedly at an “intermediary stage”.
Rumours surrounding the merger of these two players have been flying for almost two years now, including various ownership strategies of the merged entity, although no agreement could ultimately be reached.
All of Spain’s operators have been under increasing financial pressure in recent years, partly as a result of the expensive rollout of 5G and fibre, with profit margins growing slimmer and slimmer. Various executives across the sector have called for much-needed consolidation, with Vodafone’s Group CEO Nick Read notably saying he would not rule out any options when it came to potential M&A dealmaking.
"We do not rule out options. We evaluate everything, thinking about what will be the best for our shareholders," he said.
Towards the end of 2021, each of Telefonica, Orange, and Vodafone were announcing cost cutting measures, including significantly reducing the number of their respective workforces.
In related news, in Italy, another highly competitive telecoms market, the media has today reported that French telco Iliad has made a bid to takeover Vodafone Italy. Similar to Spain, this merger would reduce the number of players in the country from four to three, creating a new business of scale enough to take on the market leader, in this case TIM.
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