HE Spanish telecommunications industry It records movements that will have far-reaching, truly systemic consequences in the corporate organization and the functioning of the entire industry. All major telcos (Telefónica, Orange, Vodafone and MásMóvil) They are suffering from significant shocks that have already been outlined and that will certainly occur in the coming weeks and will change the present and future of most companies and other smaller competitors.
Spanish telecommunications companies were already preparing for the impact of the expected merger between them. Orange and MásMóvil. This was a minor earthquake, but its magnitude and impact on other rivals will depend on the conditions Brussels will impose to approve the operation. A. Ok This agreement from the European Commission will in principle take place before the end of the year and will result in the completion of the transaction in the first months of next year, as both companies hope.
The sale of the company was added to the turmoil that has been expected for a year for the merger of the third and fourth largest operators in order to create a new national giant. Vodafone Spain It’s a project—initially only on the cards since May and now finalized—that has been in the works for months but has accelerated in recent weeks as several interested parties took control of the company.
British fund Zegona agreed this Tuesday to buy Vodafone’s Spanish subsidiary for 5,000 million euros in order to revive it after years of million-dollar red figures and customer losses. The target is to close the operation in early 2024, after receiving approval from the Government and the National Markets and Competition Commission (CNMC).
The most unexpected move is the one that could cause not only an institutional but also a political shakeup. And the surprising raid Saudi Arabia inside Telephone and its intention to become the group’s largest shareholder, announced two months ago, could trigger further movements in the group’s capital. This could even lead to the state becoming a shareholder again through the introduction of a publicly traded holding company, a quarter of a century after the telecommunications company was fully privatized. SEPI In partnership, in coordination with other national groups, the Government’s effort to rebuild a tight core of Spanish partners (along with those already in place) BBVA, It currently has 4.8% in the telecommunications sector, anyway Caixabank Criteria, There is another 5 percent as a counterbalance to the Saudi position.
Under the supervision of the European Union (in the case of the Orange-MásMóvil union) and the Spanish Government (which must give official permission for Saudi Telecom to acquire 9.9% of Telefónica as planned, and also allow the acquisition of Vodafone by Zegona) . The future of the telecommunications sector in Spain will be defined in the coming months, both by deciding who will lead the major corporate groups and by the unleashing of other parallel moves that will affect all actors in this sector.
More business aggression
The telecommunications sector in Spain has been growing for years fierce competitive ecosystem. Telecom companies are locked in a permanent trade war, with the continued rise of low-cost operators and the constant emergence of new competitors, fueled by European regulations that encourage this. Emerging corporate movements may worsen this scenario.
Zegona fund takeover could see Vodafone increase business aggressiveness to reduce customer churn in recent years and return to the path of lost profitability, selling the company again within a few years (as it had previously done in the Spanish telecom sector with Telecable and Euskaltel, which it sold to Euskaltel, which placed MásMóvil). Zegona has signed an agreement to relaunch the Vodafone brand in Spain for 10 years and also plans to further promote the Lowi group’s low-cost brand.
The entire telecommunications industry is waiting to see when and above all how this will happen. Merger of Orange Spain and MásMóvil. The final outcome of the Brussels decision may also lead to further increase in extreme competition in the Spanish market.
The European Commission believes the operation could distort competition in the sector and ‘stopped the clock’ on the fusion analysis process to have all the time needed to dig deeper. To the revolution that the union of the second and fourth largest operators in the Spanish market will create for the sector, other chain consequences will be added, the depth of which will depend on the exact decision of the community authorities.
Orange-MM domino effect
It is assumed that Brussels will impose conditions Approving the operation (‘remedies’ in economic and social jargon) forces companies to get rid of some assets to gain regulatory approval. However, the severity of these demands will determine other corporate moves and the strategies of other operators.
All major Spanish telecommunications companies are demanding that the operation be authorized by Brussels without imposing harsh conditions on the transfer of assets in order to advance the consolidation of the sector. Largest groups fear decision will target them once again introduce a fourth operator and does not allow progress towards a more rationalization of the damaged business. Best positioned to take control of excess assets from the merger is Romanian company Digi, which is growing strongly in Spain with its low-cost model and could see its strategy strengthened by further fueling the sector’s commercial aggressiveness.
Also the hardness remedies and the distribution decided by the Commission Direct consequences for wholesale business of major telecommunications companies, a strategic business for groups that lease the use of their infrastructure (especially networks) to other competitors. Conditions for Brussels’ approval of the Orange-MásMóvil union will presumably require companies to outbid or give up competitors such as Digi or Avatel (which currently uses the Movistar network) in order to be able to use the Orange network at lower prices. so they have their own network. In any case, movements in the wholesale trade of the sector are considered safe. In parallel, Zegona’s acquisition of Vodafone could also accelerate the eventual sale of the Spanish company’s fixed network (cable and fiber), resulting in turmoil in the industry and causing competitors to take positions.