Spain’s economy minister is advocating for consolidation in the telecom market, as regulators study the proposed merger between Orange SA’s local business and Masmovil Ibercom SA, two of the country’s largest carriers.
(Bloomberg) — Spain’s economy minister is advocating for consolidation in the telecom market, as regulators study the proposed merger between Orange SA’s local business and Masmovil Ibercom SA, two of the country’s largest carriers.
“Competition policy has to adapt to the changes that are taking place in the market,” Economy Minister Nadia Calviño said in an interview when asked about the deal. “The current competition structure has nothing to do with that of the past. Traditional telecommunications operators are subject to increasing competition from new entrants such as the large digital platforms.”
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The European Commission is expected to issue an opinion next year on Orange and Masmovil’s plan to combine businesses in Spain, in a deal with an enterprise value of at about €18.6 billion ($19.9 billion) that will create the country’s largest carrier. In recent years, the Commission has opposed large deals, most notably with its 2016 decision to block CK Hutchison Holdings’s attempt to buy Telefonica SA’s O2 UK — its first-ever veto of a mobile tie-up.
At the time of the Hutchison-02 decision, regulators argued that pledges to increase investment and freeze prices failed to offset antitrust concerns. Still, a 2020 European court ruling overturned the veto. While the decision came too late for the deal, it was seen as a sign that the bloc might be more open to tie-ups in the future.
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The industry has long argued that the European market is too fragmented, with hundreds of operators, and that consolidation is necessary to sustain profitability. They also say that they face competition from technologies such as WhatsApp, the messaging service owned by Meta Platforms Inc., which is widely used for calls and messages.
Between 2006 and 2010, Calviño was assistant director general for competition at the European Commission.
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