Orange, MASMOVIL agree to combine Spanish operations
Orange and MASMOVIL say they have agreed to create a joint venture which would combine the operations of Orange Spain and MASMOVIL. Management of the joint venture, currently called LORCA JVCO, would be evenly divided. The agreement includes a right to trigger an IPO under certain conditions for both parties after a defined period; in such a scenario Orange can take control of the combined entity at the IPO price.
The transaction assumes a total enterprise value of €18.6 billion ($19.04 billion), €7.8 billion ($7.99 billion) for Orange Spain and €10.9 billion ($11.16 billion) for MASMOVIL. The deal is expected to close during the second half of 2023 and is subject to the approval of antitrust and other relevant administrative authorities.
The transaction is supported by a €6.6 billion ($6.76 billion) non-recourse debt package, mainly from a pool of banks, that will finance, among other things, a €5.85 billion ($5.99 billion) payment to the Orange Group and MASMOVIL shareholders. Orange shareholders are expected to receive more than their MASMOVIL counterparts because of the relative levels of indebtedness of the two standalone businesses. MASMOVIL’s existing debt will remain in place.
The agreement includes a leverage target of 3.5X net debt/EBITDA ratio to facilitate an IPO of the joint venture in what the two companies called “the medium term.” The transaction does not include TOTEM Spain and MASMOVIL Portugal but does include EUSKALTEL.
The two companies have been working on the agreement since this past March. They say their due diligence since then reveals synergies in excess of €450 million annually by the fourth year after closing.
“I am very happy to announce the conclusion of these negotiations today. This deal paves the way for the creation of a joint company that combines the forces of ORANGE and MASMOVIL into a single, stronger operator that will enable investments in 5G and fiber, benefiting customers across Spain. I strongly believe that the creation of this new company is of fundamental importance for the Group, the Spanish telecoms market and for our customers,” said Christel Heydemann, CEO of Orange.
“This is a great day for Spanish consumers as well as for our stakeholders,” added Meinrad Spenger, CEO of MASMOVIL. “Together with ORANGE, we plan to form a strong operator with a sustainable business model and the capacity to invest in world-class infrastructure, technology, and talent. We anticipate this will drive competition, digitization, and innovation in the Spanish market.”
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Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
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