In a merger of equals, the new company would rival Telefonica in size
French telecom operator Orange is said to be exploring the idea of merging its Spanish unit, Orange Spain, with local rival MasMovil, according to Spanish newspaper Expansion, which accredited its intelligence to secret ‘market sources’.
In a podcast it explains that the merger plan moots the idea of creating a new company. Orange would own 50% of the new entity, with the other half to be split between MasMovil’s shareholders, namely three equity funding companies: New York-based KKR, Europe-focused Cinven and US-based Providence.
Merger would create a monster
A merger of Spain’s second and fourth largest mobile network operators would be on a scale with Telefonica and leave third placed Vodafone in its wake, the newspaper said.
European carriers have repeatedly called for market consolidation to reduce competition and protect their profits as consumers see their disposable income eroded by inflation and a lockdown economy.
Mergers will speed up 5G rollout?
Mergers would create more leverage to finance the necessary improvements to the infrastructure to support 5G. In 2021 Orange France and Vodafone UK revealed that their idea of a merger between equals was crushed by opposition from the French government.
When it was revealed that Vodafone had approached Three UK’s parent about a merger, its CEO Nick Read said that a substantial European consolidation was inevitable. Orange merger talks may be complicated by the fact that the newly appointed CEO Christel Heydemanndoesn’t take over until 1 April.