Orange-MásMóvil Merger: Balancing Innovation and Market Competition

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After a comprehensive assessment initiated in April of the previous year, the European Commission has finally given the green light to the formation of a 50:50 joint venture (JV) amalgamating France’s Orange and Spain’s MásMóvil. However, the approval of the JV came with a contingency, requesting Romania’s Digi, which is Spain’s largest MVNO, to procure spectrum from MásMóvil, thereby exploring the possibility of becoming Spanish market’s fourth mobile operator.

The origination of the investigation was based on a suspicion that the JV could potentially disrupt market competition. The merger would make the new organization Spain’s largest operator in terms of the consumer base, simultaneously reducing the number of market competitors from an existing four operators to merely three.

To alleviate this concern, Digi, which has established operations across Portugal, Italy, and Belgium, embarked on a spectrum transfer agreement in December, last year, in collaboration with the two Spanish firms. The agreement, whose worth equaled €120 million, has enabled Digi to secure 2x10MHz in the 1,800MHz band, 2x10MHz in the 2.1GHz band, and 20MHz in the 3.5GHz band spectrum. Therefore, Digi now holds the potential to efficiently replace a fourth MNO in the Spanish market and present a feasible solution to the market competition issue.

Christel Heydemann, the CEO of Orange, underlined the spectrum transfer’s significance, stating that the deal will scale up innovation and investment in Spain. She backed her statement by adding that the merger would engender a “stronger and more sustainable” contender.

EU antitrust chief, Margrethe Vestager, reassured the Spanish consumer base by emphasizing the beneficial aspect of the commitment of these parties in a press release. She said, “The commitments offered by the parties will enable Digi, the largest and fastest-growing mobile virtual network operator in Spain, to replicate the strong competitive pressure exerted by MásMóvil. They will ensure that consumers in Spain continue to benefit from a competitive telecom market, about prices, quality, and 5G connectivity.”

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