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Vodafone Spain’s Potential Sale: Impact of Orange-MasMovil Merger and Strategic Alternatives

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Vodafone is currently seeking advice on whether or not to sell its operations in Spain, with a decision expected to be made within a few months. Spanish newspaper Expansion reported that the company is working with external advisors, including Morgan Stanley and Garrigues, to explore various strategic alternatives for Vodafone Spain.

A decision is anticipated after the summer, likely in September, coinciding with the European Commission’s investigation conclusion on the proposed merger between Orange Spain and MasMovil on September 4th. The outcome of this investigation will likely influence Vodafone’s final decision.

In regards to the Orange/MasMovil merger, Reuters has reported that the Commission will release a statement of objections in the coming days, warning that the deal could potentially be anticompetitive. This will likely prompt the involved telcos to present concessions, but confirmation awaits.

Vodafone’s Spanish operations would be considerably affected by the Orange/MasMovil deal. Currently occupying third place in the four-operator mobile and fixed broadband sector, it only trails Orange by a small margin. If the merger succeeds, Vodafone would become the smallest player in both sectors. Hence, the impact of the merger, along with any potential competition remedies, must be considered before deciding to sell Vodafone Spain.

While the telecom industry is eagerly awaiting the European Commission’s decision, Vodafone is being linked more with investors than strategic buyers. Expansion reports that the company has contacted several funds about potentially acquiring the Spanish business, including Apollo Global Management and Apax Partners.

Berenberg’s current data values Vodafone Spain at approximately €3.9 billion, significantly lower than the pre-existing €7.5 billion offer from MasMovil, reported by Expansion in March 2021. Vodafone Group, then led by former CEO Nick Read, deemed the offer too low and rejected it.

Responsibility now falls on new CEO Margherita Della Valle to improve the company’s position and appease shareholders. Vodafone Spain’s sale could contribute to this, depending on the price. Although confirmation is still a few months away, the possibility of a sale seems increasingly likely.

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