It is still unknown where the headquarters of the new company and its commercial name will be located.
The Council of Ministers has given approval to the merger of Orange and MásMóvil, after the Government has authorized the operation from the point of view of the regulation relating to foreign investments and also the radio spectrum agreement reached by the two companies with Digi and that was closed so that the European Commission gave the green light to the transaction.
“The Council of Ministers has today approved the merger of equals for the combination of their businesses in Spain of two operators in the telecommunications sector, Orange and Masmóvil. This merger results in the first operator in Spain, with more than 30 million customers of mobile use, with more than 7 million broadband customers and more than 2 million television service customers,” said the head of the portfolio for Digital Transformation and the Public Service, José Luis Escrivá.
“The approval of this merger is accompanied by an industrial plan of the resulting entity that is truly ambitious and with a very medium-term orientation, with a very powerful investment policy over the coming years in fixed and mobile digital infrastructures,” he added. Escrivá at the press conference after the Council of Ministers.
The operation, valued at around 18.6 billion euros and which will create a leading company in the Spanish telecommunications market by number of clients and fiber and mobile coverage, already received approval from the European Commission on February 20.
After the authorization of the Executive, it is expected that the pending administrative procedures to close the operation definitively will be concluded in a couple of weeks, so the deadlines contemplated by both companies will be met, which hope to complete the transaction in the first quarter of the year. .
In that sense, starting the day after the closing of the pending issues, the two companies will begin to operate as one.
INVESTMENT AND EMPLOYMENT COMMITMENTS
Regarding the investment commitments contemplated in the industrial plan of the new entity, Escrivá has stressed that they are “very important.”
“They are very explicit in terms of investments in fixed and mobile connectivity and how the networks are going to be operated. Logically, the industrial plan, which contains many details, is maintained with a level of reserve, because it would reveal competitive elements of the company, and this is always the case. Therefore, the specific details cannot be disclosed,” he clarified.
However, he assessed that they are “extensive” and that they also contain commitments to “sufficient maintenance of employment.”
Regarding the impact of the merger on employment, in mid-February the CEO of Orange in Spain, Ludovic Pech, limited himself to pointing out that the announced synergies “are based mainly on industrial synergies and not on employment issues.”
‘REMEDIES’ A DIGI
In this context, the approval of the merger between Orange and MásMóvil by Brussels was subject to certain conditions (‘remedies’), which were already agreed with Digi last December.
The Romanian operator closed a 120 million euro agreement with MásMóvil for the acquisition of a total of 60 megahertz (MHz) of radio space in different frequency bands.
As indicated by Digi in a statement, this firm signed a spectrum transfer contract related to the transmission by Xfera Móviles (MásMóvil) of the spectrum licenses for two 10 MHz blocks in the 1,800 MHz band, another two MHz in the 2,100 MHz band and 20 MHz in the 3,500 MHz band.
Likewise, Digi closed another agreement with Orange by which the latter grants the Romanian operator the option to enter into a “national roaming service agreement” in the future for the provision by Orange to Digi of a wholesale service.
In that sense, the Ministry for Digital Transformation and Public Service also had to approve this agreement.
ORANGE CAN TAKE CONTROL
Following the approval of the operation by the European Commission and the Government, the joint activities of the two companies will be formalized in a ‘joint venture’ controlled 50% by Orange and MásMóvil “with the same governance rights in the combined entity “.
However, in the presentation of Orange’s results in Spain that took place in mid-February, Pech stressed that the operator is considering taking a controlling stake after the merger with MásMóvil and acquiring an additional 1% of the joint venture. , until reaching 51%, a possibility that is included in the agreement signed between the parties in March 2022.
The manager recalled that this option of taking a control position would be executed between 24 and 42 months after the closing of the operation.
LEADING CUSTOMER OPERATOR
The new company will create a leading operator in the Spanish telecommunications market by number of clients and fiber and mobile coverage.
“In addition, it will be a sustainable actor with the financial capacity to continue investing in the development of a leading telecommunications infrastructure in Spain,” the two companies added at the time.
Specifically, between both companies they bring together around 7.3 million broadband customers in Spain, around 30 million mobile services and 2.2 million television customers.
“The joint venture will manage significant network and IT assets to ensure national coverage in both FTTH (fiber to the home) and 4G and 5G. In financial terms, the combined entity will become a stronger operator with estimated revenues of more than €7.4 billion and an Eebitdaal (gross operating profit after leases) of more than €2.3 billion, with an enterprise value of €18.6 billion and expected synergies of more of 450 million euros per year (starting in the fourth year after the closing of the operation)”, they detailed.
ADDRESS OF THE NEW ENTITY
The agreement for the merger of the two companies states that the CEO of MásMóvil, Meinrad Spenger, will be the CEO of the new operator, while Ludovic Pech will be the financial director and Jean Fraçois Fallacher, non-executive president of Orange in Spain, He will be the president of the joint venture.
However, it is still unknown where the headquarters of the new company will be located and also its commercial name.
