Deal To Consolidate Spanish Telecom Market In The Works

French telecom carrier Orange and Masmovil Ibercom are working to consolidate the telecom market in Spain through a merger that would result in a company with a combined value of 19.6 billion euros (about $21.3 billion) and come to dominate the Spanish mobile market, Bloomberg reported Tuesday (March 8).

If the merger comes to fruition, the combined company would be a 50-50 joint venture, co-controlled by Orange and Masmovil, according to a statement released by the companies. Masmovil has debt of about 6 billion euros (about $6.5 billion), Bloomberg reported, meaning it will have to make a cash payment to Orange to balance the merger.

The proposed merger also includes a right to trigger an initial public offering (IPO) “under ceratain conditions” and a path-to-control right for Orange, according to the statement. Orange and Masmovil have a combined revenue of more than 7.5 billion euros (about $8.2 billion).

Merging the companies would bring about 450 million euros ($490 million) in annual synergies by the third year after closing, the report stated.

Orange is Spain’s second-largest telecom operator. Masmovil was delisted two years ago after a leveraged buyout by three private equity funds, including Cinven, KKR and Co., and Providence Equity Partners. Masmovil later acquired Spanish telecom firm Euskaltel in July of last year, and has been expanding across Portugal.

Orange and MasMovil were involved in a joint investment agreement that allowed them to deploy a next-generation fiber optics network across the country.

In January, Orange invested an undisclosed amount through its holding company in the Move Capital I fund to support future B2B tech “champions” in Europe. Move Capital is active in Internet of Things (IoT), artificial intelligence (AI), cybersecurity, data analytics and other tech-related fields.

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.