the deal will have an estimated value of almost 20 billion euros

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For a long time there has been a rumination macro operation in the telecommunications sector, and today Orange and MásMóvil have announced the exclusive negotiation what suggest a merger in which the combined entity will have a valuation of 19,600 million euros.

This merger—a joint venture—would become the most important operation in this segment in recent years. The agreement would integrate the assets and equipment of both companies in Spain, and the right to launch an IPO is contemplated, in which case Orange could take control of the combined entity.

A gigantic business in Spain

both entities are highly valued: Orange has a valuation in Spain of 8.1 billion euros, while MásMóvil (Lorca JVO, which includes the acquisition of Euskaltel) has a valuation of 11.5 billion euros.

As indicated in expansioncompany management would remain in the hands of Meinrad Spenger, the current CEO of MásMóvil and Euskaltel. Orange will reserve the chairmanship of the board of directors and also the position of chief financial officer (CFO) according to industry sources.

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The deal would give both entities equal voting rights. These negotiations establish the right to launch a Public Offering of Sale (OPV) and Orange’s right to take control and consolidate the resulting combined entity in the event of an IPO. That IPO would foreseeably cause a change in the hierarchy of the combined entity.

This Joint Venture would integrate the assets and equipment of both companies, and service would be provided to customers in their different business areas of Orange and MoreMobile respectively:

  • Fixed customers: 4 million + 3.1 million (3 + 2.6 are convergent)
  • Postpaid mobile customers: 11.5 million + 8.7 million
  • TV clients: nearly 1.5 million

With this agreement, the resulting entity would also have a fiber optic network that reaches 16 million homes. Estimated revenue would be 7,500 million euros and EBITDAal of 2.2 million euros.

Threat to Telefónica’s privileged position

The joint venture between Orange and MásMóvil poses a serious competitor for the Spanish telecommunications giant, Telefónica. In fact, with the merger, those responsible for the negotiation announce, an “ambitious and sustainable expansion of its FTTH and 5G networks” would be addressed.

The joint venture between Orange and MásMóvil poses a serious competitor for the Spanish telecommunications giant, Telefónica

That momentum will make both groups compete in 5G deployment both in the 700 MHz band, which allows its coverage to be extended, and in the 3.5 GHz band, which is the one that will bring together most of the traffic.

The agreement leaves behind the other possible macro operation in this sector: until not long ago it seemed that the ones that would end up joining would be MásMóvil and Vodafonebut finally the already existing synergies —MásMóvil rents Orange’s mobile network— have favored these latest negotiations, which are exclusive and which are expected to start closing in a few weeks.

The transaction is expected to close during the second quarter of 2022 and should close in the second quarter of 2023“once the appropriate approvals have been obtained from the pertinent administrative, competition and regulatory authorities”.

For a long time there has been a rumination macro operation in the telecommunications sector, and today Orange and MásMóvil…

For a long time there has been a rumination macro operation in the telecommunications sector, and today Orange and MásMóvil…

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