The €18.6 billion merger has a lukewarm reception from EU regulators, who fear the move will drastically reduce competition in the Spanish market
This week, a report from Reuters suggests that Orange and MasMovil may have found a solution to their merger woes in the form of Romania’s Digi, whom they have selected to purchase a number of the companies’ assets in order to appease EU antitrust concerns.
Orange and MasMovil first agreed to merge their Spanish businesses in March last year. The deal, worth almost €19 billion, would combine the second and fourth largest telcos in the country, creating a new market leader in both the fixed broadband and mobile segments.
As such, the deal immediately came under strict scrutiny from European regulators, who fear the move would decrease competition and drive up costs for consumers.
Naturally, Orange and Masmovil disagree, saying that the deal would allow them to invest more effectively in infrastructure and compete more effectively with market leader Movistar (Telefonica).
Now, almost a year on, the merger has become something of a yardstick for regulatory feeling towards major European telecoms consolidation, with various interested parties throughout the bloc watching the situation closely.
Initial investigations into the merger were paused by EU antitrust regulators earlier this summer, with the regulators having requested more information from the two telcos. It was widely understood that the European Commission was preparing to deliver a ‘statement of objections’ to the operators, requiring the telcos to suggest various remedies to assuage their competition concerns.
Since then, numerous companies have emerged as willing beneficiaries of any asset divestment made by MasMovil and Orange, including Digi, Avatel, Finetwork, and a number of smaller players. According to the sources speaking to Reuters, Digi has emerged as the EU Commission’s preferred choice.
The proposed deal would see Orange and MasMovil offload mobile spectrum and a consumer unit/brand to Digi, as well as offering Digi access to their infrastructure in Spain on a wholesale basis.
Discussions are reportedly ongoing, with Orange saying they are confident that the merger will be cleared by the end of the year.
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