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Orange, Spain's MASMOVIL In Talks To Form JV In Spain

French telecom major Orange SA (ORAN) announced Tuesday that it has entered into exclusive discussions with Spanish telecom company MASMOVIL Group (LORCA JVCO) 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 19.6 billion euros.

ORANGE Spain's enterprise value is at 8.1 billion euros, and MASMOVIL's enterprise value is at 11.5 billion euros.

The transaction is expected to be signed by the second quarter of 2022 and to close by Q2 2023, subject to approval from the relevant administrative, competition and regulatory authorities.

ORANGE and LORCA JVCO would benefit from equal governance rights in the combined entity. Accordingly, neither ORANGE nor LORCA JVCO will consolidate the combined operations.

The company noted that TOTEM Spain and MASMOVIL Portugal are not part of the contemplated transaction.

The agreement between the companies includes a right to trigger an IPO under certain conditions for both parties, and a path-to-control right for ORANGE to consolidate the combined entity in the case of an IPO.

ORANGE said it would neither be forced to exit nor to exercise these options.

The combined entity would become a stronger market player with revenues of over 7.5 billion euros, and EBITDAaL over 2.2 billion euros.

The joint venture is expected to generate relevant synergies that would reach an annual run rate in excess of 450 million euros from the third year post closing onwards.

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