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Reuters

Brussels fears Orange and MásMóvil merger could lead to 'large price hikes'

The European Commission warned that competition issues could arise out of a drop in the number of operators in the Spanish telecommunications market

Edurne Martínez

Madrid

Wednesday, 28 June 2023, 09:16

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Brussels fears a merger between telecommunication giants Orange and MásMóvil could lead to an increase in prices for customers in Spain.

The European Commission warned this Tuesday 27 June that the merger will create competition problems, and fears a reduction in the number of network operators in the Spanish retail mobile and internet markets.

This conclusion follows an in-depth investigation that started last April to determine whether the deal would jeopardise competition in the supply of bundled network services and mobile and fixed broadband in Spain.

"The expected anti-competitive effects are substantial, even taking into account possible cost savings, in a context where competition has been a driver of investment and quality of services in the Spanish market," the European Commission said in a statement.

The merger would create a new leader in terms of customers in Spain, although Telefónica will still have the greatest turnover. In the statement of objections sent by the European Commission to the companies, the EU services pointed out their concern that the merger could lead to "large price increases for affected retail customers throughout the Spanish market".

Orange and MásMóvil sources welcomed Brussels' withdrawal of the wholesale market considerations, and announced that they will continue to work to "convey to the Commission the benefits of the transaction for consumers and businesses".

The two companies claimed the merger will benefit both in more choice for customers and in increased and accelerated investment in 5G and fibre in Spain.

One giant with 24 million mobile customers

The merger was finalised last summer after five months of negotiations, and will create a company valued at €18.6 billion, but the deal is subject to the approval of the competition authorities, who are still assessing it.

The initial forecasts were that the deal will be completed by the second half of 2023 at the latest, and that until then each of the two brands will continue to operate independently.

The new operator would have almost 24.5 million mobile lines, compared to Movistar's nearly 16 million and Vodafone's 12.5 million. Of the new merger valuation, 7.8 billion is valued for Orange and 10.9 billion for MásMóvil.

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