Following today’s news (8 March) that Orange and MASMOVIL have entered exclusive talks to form a 50:50 joint venture of their Spanish operations;

Madison Galati, Telecoms Market Data & Intelligence Analyst at GlobalData, a leading data and analytics company, offers her view:

“The potential merger will significantly impact the highly competitive Spanish telecoms market by reducing overall competition and introducing a new market share leader.

“In the mobile market, the merger of Orange and MASMOVIL will result in the two operators moving from their third and fourth places, respectively, to a leading position. In 2021, the two operators had a leading combined market share of 42%. Furthermore, the combined total mobile service revenue would top the market with $4.3 billion in 2021, surpassing the previous market leader Movistar. The two operators will be able to access each other’s Mobile Virtual Network Operators (MVNOs)/sub-brand mobile subscriber base which target various market segments as well as each other’s 5G mobile networks.

“On the fixed side, the joint venture would hold a leading market share of 42% in the fixed internet market in 2021 and a second-place market share of 32% in the fixed voice market after Movistar. The companies will be able to leverage each other’s large fiber networks with the joint venture holding a leading 45% fiber market share in 2021.”

Sergej Gavrilov, Telecoms Market Data & Intelligence Senior Analyst at GlobalData, further adds that:

“The potential merger is the latest in a slew of communications service providers (CSP) M&As that have been occurring in Europe in the last few years, with convergence-induced M&As, and expansion of fixed broadband footprint and market shares as key drivers.

“For example, MASMOVIL’s acquisition of Euskaltel in Spain in June 2021 was driven by the company’s desire to expand its fixed broadband footprint, access MVNO/sub-brand mobile subscribers, accelerate 5G and fiber investment, and reduce market competition.

“GlobalData’s recent report * includes the rationale driving M&A deals in Europe and other telco M&A examples such as Orange Romania acquiring fixed assets from Romtelecom, and O2 merging with Virgin Media in the UK. Also, Iliad acquired mobile operator Play to enter the Polish market, where subsequently, it acquired fixed assets from Liberty Global in 2021. Other developments include telcos acquiring MVNOs to expand market share in specific customer segments; and private equities and institutional investors buying and investing in telcos and their infrastructure.”

*Information taken from GlobalData’s report ‘Communications Service Provider M&A in Europe: Key Trends and Insights’