Orange, Masmovil Plan Merger, Launch of Spanish Telecom Division

French telecom carrier Orange and Masmovil Ibercom are working to consolidate the telecom market in Spain through a merger that would value the combined company at 19.6 billion euros (about $21.3 billion), 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 certain 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 acquired Spanish telecom firm Euskaltel and has been expanding across Portugal.

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.

Read more: French Telecom Orange Backs B2B Tech Fund

Orange noted at the time that the B2B tech ecosystem is in the midst of an evolution due to developments such as 5G, the data boom, migration of services to the cloud, the rise of connected objects and the need for cybersecurity to protect it.