How an Unlikely Spanish Merger Triggered a Reshape of the Telecom Landscape


By Tom LeinsApr 11, 2024


Last month saw the conclusion of the long-running mega-merger between Orange España and Grupo MASMOVIL in Spain.

The EUR19 billion ($20.5 billion) tie-up—first agreed back in July 2022—created a new Spanish market leader that presides over a mobile/fixed broadband subscription base of 37 million. Now known as MasOrange, the 50:50 joint venture looks like a force to be reckoned with.

Today, we take a look at the Spanish deals that came into play in the wake of the merger, and see how they could reshape the telecom landscape.

Romania’s Digi Agrees To Buy MASMOVIL Spectrum To Help Push Through Deal

In October 2023, while striving to convince antitrust regulators of the merits of the Orange-MASMOVIL merger, Orange Group and Grupo MASMOVIL pre-selected Romania’s Digi Communications to purchase the assets they planned to relinquish. This decision aimed to allay EU competition concerns relating to the proposed merger of their Spanish businesses.

Digi, already active as an MVNO/fiber ISP in Spain, revealed in December 2023 that it agreed to pay EUR120 million for a number of MASMOVIL’s spectrum licenses as it seeks to transition toward a mobile network operator (MNO) model.

The European Commission gave the Orange-MASMOVIL deal the green light in February 2024. 

Zegona To Acquire Vodafone Spain; Investment Fund Also Makes a Play for Avatel

In October 2023, London-listed investment fund Zegona Communications—which previously oversaw the takeover, turnaround, and sale of Spain’s Grupo Euskaltel—entered into binding agreements with Vodafone Group concerning its plan to acquire 100% of Vodafone Spain for up to EUR5 billion.

The purchase will be funded by a combination of new debt (EUR4.2 billion), EUR900 million from Vodafone Group, and new equity worth up to EUR600 million. In turn, the UK telco will license Zegona to use the Vodafone branding in Spain for a period of up to ten years upon completion.

On January 31, 2024, the National Commission of Markets and Competition (Comisión Nacional de los Mercados y la Competencia) approved the takeover after a first-phase review, noting that “the activities of the parties do not overlap horizontally or vertically in Spain.”

Intriguingly, in February 2024, Zegona was discovered to be in takeover talks with Spain’s self-proclaimed fifth national fiber operator, Avatel Telecom, with intentions of buying the company.

Avatel primarily serves small and medium-sized towns across Spain and claims to have integrated around 150 local operators since its formation in 2012. Notable deals include a 2018 takeover for TV Horadada Group, which served Murcia and Alicante, and a 2022 deal for SomosFibra, which comprised around 20 smaller operators in southern Spain. The latter deal added around 100,000 customers and 700,000 homes passed to Avatel’s portfolio. 

What Does the Future Hold?

When the dust finally settles, it is clear that the Spanish telecom landscape will look very different.

Although Telefónica España (Movistar)—previously the country’s largest mobile, fixed broadband, and fixed voice provider in terms of subscriptions—opted out of the M&A frenzy, its three national rivals have all entered into transformative deals. The four-player market structure will be preserved, but three of the four main players will be changed.

MasOrange has toppled Movistar as the country’s largest operator, leapfrogging it in all sectors of the telecom market.

MasOrange has toppled Movistar as the country’s largest operator, leapfrogging it in all sectors of the telecom market. All eyes will now be on the other protagonists.

Vodafone will feel a renewed sense of confidence under the stewardship of turnaround specialist Zegona. The UK investor’s projected move for Avatel comes straight out of the Zegona playbook, too.

Back in July 2015, Zegona agreed to pay EUR706 million for regional cableco Telecable, before selling the unit to Euskaltel two years later. As part of the latter transaction, Zegona acquired a stake in the enlarged Grupo Euskaltel and went on to help push through the EUR2 billion sale of Euskaltel to Grupo MASMOVIL in 2021.

As long as Zegona is able to navigate possible antitrust hurdles, the potential fusion of Vodafone and the fast-growing Avatel represents a unique combination confident of challenging the status quo.

The real curveball is Digi, which already boasts a strong MVNO/fiber business in Spain. The Romanian-backed firm—which also has designs on Belgium and Portugal—will be bolstered by its asset deal and relish its position as unheralded challenger.

Indeed, the way the company has positioned itself to acquire the freed-up assets of the Orange-MASMOVIL merger is reminiscent of MASMOVIL’s own 2015 deal to acquire assets that were deemed surplus to requirement when Orange swooped for Jazztel.

That particular deal paved the way for MASMOVIL to grow its previously modest fixed broadband business into a nationwide concern and gave it a springboard to enter the MNO sector via the EUR479 million acquisition of Yoigo in October 2016. 

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Tom Leins

Tom Leins

Tom Leins is a Senior Research Analyst for TeleGeography’s GlobalComms Database. Based out of the company’s UK office, he also contributes to the company’s daily CommsUpdate newsletter, which includes his popular weekly MVNO Monday round-up. MVNO industry aside, Tom has developed a strong specialization in the U.S., Latin America, and the Caribbean, tracking mergers and acquisitions, spectrum auctions, regulatory developments, market opportunities, and growth trends.