Spain OKs Orange/MasMovil merger

It means the telcos have cleared the final regulatory hurdle to a deal with an estimated enterprise value of around €18.6 billion.

In a press conference that was uploaded to X (formerly known as Twitter), Spain's Digital Transformation Minister José Luis Escrivá said the tie-up – and the remedies that come with it – will guarantee the best services for end users, noting that the combined entity has "an ambitious" plan to invest in its networks.

"This merger will create the leading operator in Spain, with more than 30 million mobile customers, more than 7 million broadband customers, and more than 2 million TV customers," he declared.

Describing telecoms networks as critical, strategic national assets, Escrivá said the competitiveness of a country partly depends upon its digital infrastructure and its connectivity.

True, but it's the competitiveness of the Spanish telecoms market that will likely attract closer scrutiny in the immediate term.

As covered previously, in return for regulatory approval, Orange and MasMovil agreed to divest spectrum to MVNO Digi Communications. Orange also agreed to provide national roaming to Digi, further extending the latter's coverage.

It means that despite the EU repeatedly insisting there is no magic number of operators per market, by the time the dust settles on the Orange/MasMovil merger, the remedy package ensures that Spain will still have the same number of MNOs as it did before.

Incumbent Telefónica recently lamented the spectrum concession, calling it a missed opportunity to create an investment-friendly market structure, and warning that the remedies will prevent Spanish operators from achieving the necessary scale to make large investments in next-generation infrastructure.

Telefónica went so far as to question whether the EU's merger rules are still fit for purpose.

Obviously Telefónica has a vested interest in there being fewer rivals with which to compete, but it's not often that an operator goes into bat for two competitors that – once merged – will overtake it to become the biggest mobile provider in its home market.

If Orange's tie-up with MasMovil doesn't deliver the promised improvement to connectivity in Spain, and if Digi struggles to achieve the scale needed to compete effectively, then the EU's decision to regulate the number of MNOs at a time when it is trying to stimulate network investment could come back to haunt it.

Meanwhile, Escrivá's blessing means that for Orange and MasMovil, their so-called merger of equals is on track to close by the end of the quarter. That's when the hard work – and upheaval – that comes with integration really begins.

Additional reporting by Mary Lennighan