Spanish consolidation begins with Masmovil and Euskaltel

It has long been suggested that the highly competitive Spanish telecoms market was ripe for consolidation. Now, Masmovil has approached Basque-based operator Euskaltel with a purchase offer of around €2 billion.

 

According to Masmovil, shareholders holding 52.32% of Euskaltel’s equity have already agreed to a price of €11.17 per share, a premium of 26.8% on the shares’ average price over the last six months. 

 

The purchase of Euskaltel would greatly boost Masmovil’s position in the Spanish market, denoting the company as the operator with the “highest growth”, according to Masmovil. Currently, Masmovil has around 9.5 million mobile customers and around 2 million fixed line customers. 

 

Euskaltel, by contrast, is the fifth largest operator in Spain, with around 800,000 customers that could be added to Masmovil’s books. These customers are primarily based in the Basque region, to the country’s north-east, but a broad expansion beyond these limits began last year, with Euskaltel agreeing to use the Virgin Telco brand.

 

The deal will now await regulatory approval.

 

Masmovil has been at the heart of major movement in the Spanish telecoms market over the last year and it seems unlikely to slow down. Back in June, Masmovil agreed to a takeover from a trifecta of private equity firms – KKR, Cinven, and Providence – for a total of $3.3 billion.

 

Similarly, rumours surrounding a potential merger of Masmovil with Vodafone have been in full swing once again. Back in October, Masmovil’s CEO Meinrad Spenger called the rumours “more bluff than reality”, but since then various sources have emerged suggesting the pair are looking at the possibility more seriously. Naturally, a merger of two of the country’s largest operators would be cause for considerable regulatory concern, potentially creating a second-place entity with a similar Spanish market share to current dominant telco, Telefonica’s Movistar.