ORANGE and MASMOVIL (LORCA JVCO) announced that they have entered into exclusive discussions to combine their businesses in Spain.
The combination would take the form of a 50-50 Joint Venture, co-controlled by ORANGE and MASMOVIL (LORCA JVCO) with a combined enterprise valuation of €19.6Bn. The agreement between the parties includes (i) a right to trigger an IPO under certain conditions for both parties and (ii) a path-to-control right for ORANGE to consolidate the combined entity in the case of an IPO. ORANGE would neither be forced to exit nor to exercise these options.
The Joint Venture would bring together the assets, capabilities and teams of the two companies in Spain, building on highly complementary business models as well as an existing successful collaboration, to serve 4.0+3.13 million fixed customers (of which 3.0+2.6 convergent), 11.5+8.7 contract mobile customers and close to 1.5 million TV customers.
The Joint Venture would own network assets that provide it with a competitive edge in the market including:
A state-of-the-art, nationwide FTTH network reaching over 16m homes; A leading-edge mobile network with full national coverage, serving large volumes of traffic in the Spanish market. The combined entity would become a stronger market player with revenues of over €7.5 billion, EBITDAaL over €2.2 billion and would gain the necessary scale and efficiency to undertake an ambitious and sustainable expansion of its FTTH and 5G networks and contribute to Spain maintaining and further developing a competitive telecom infrastructure. With a comprehensive and complementary portfolio of brands, the Joint Venture would provide Spanish consumers and businesses with competitive and differentiated value propositions to serve the needs of all market segments, with high quality connectivity, an excellent customer experience and a comprehensive portfolio of innovative services in the challenging digital landscape.
Stéphane Richard, Chairman & CEO of ORANGE
I look forward to creating this joint-venture with MASMOVIL, building on our existing successful collaboration, to become a stronger player capable of making the investments required to develop the Spanish market. I know I can count on Jean-François Fallacher and the entire ORANGE Spain teams for their full mobilization until the closing in order to make this deal a success.
Meinrad Spenger, CEO of MASMOVIL
To assure leading telecom infrastructure in 5G and FTTH as well as outstanding service in Spain, we need strong operators with sustainable business models. The combination of ORANGE and MASMOVIL would be beneficial for the consumers, the telecom sector and the Spanish society as a whole. Lazard acted as financial advisor to ORANGE. Goldman Sachs Bank Europe SE acted as financial advisor to MASMOVIL and BNP Paribas acted as debt advisor to MASMOVIL.
