Spain’s Másmovíl, which is currently engaged in negotiations with Orange over the merger of their respective Spanish operations, is reportedly in the process of selling a 51% stake in a new fiber network entity being built out of the assets of Euskaltel, an operator it bought and delisted last year.

According to various Spanish media reports, Euskaltel is specifically selling its subsidiary EKT Cable – described as a NetCo that owns half of its cable access network – to Bidasoa Aggregator, a consortium of investors said to include Asúa Inversiones, Beraunberri, Inveready and Onchena. The transaction is reportedly valued at around €580 million (US$591 million).

Figure 1: It was reported last year that Másmovíl planned to set up a new subsidiary to build Euskaltel’s fiber-to-the-home (FTTH) network and was looking to divest a 51% stake.
(Source: Timon Schneider/Alamy Stock Photo)

The move has been on the cards. It was reported last year that Másmovíl planned to set up a new subsidiary to build Euskaltel’s fiber-to-the-home (FTTH) network and was looking to divest a 51% stake. The wider plan is to connect around 1.1 million homes to FTTH and migrate 2.3 million Euskaltel customers from cable networks to FTTH.

Merger progress?

Reports also note that the transaction, set to close in the coming days, is expected to help move along the proposed merger of Másmovíl and Orange Spain.

It appears that the merger negotiations had stalled over financing issues. However, Másmovíl and Orange are now said to have secured a crucial loan of €6.6 billion ($6.7 billion) from around 20 banks in Spain and France to cover the costs of the merger.

It’s now being suggested that the two operators will unveil details of the planned merger during their results presentations next week. Spanish and European Union regulators will then need to scrutinize the deal.

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It was announced in March that the two groups had entered into discussions on a merger, with the aim of creating a 50-50 joint venture that has a combined enterprise valuation of €19.6 billion ($19.9 billion) as well as more than 7 million fixed customers, over 20 million postpaid mobile customers, 1.5 million TV customers, and an FTTH network that covers 16 million homes.

Orange Spain is valued at €8.1 billion ($8.2 billion), while Másmóvil has been assigned an enterprise value of €11.5 billion ($11.7 billion). As well as Euskaltel, the latter also presides over a wide range of brands including Yoigo and Pepephone. Másmóvil is currently owned by London-based Lorca JVCO following the takeover of the operator by Cinven, KKR and Providence at the end of 2020.

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— Anne Morris, contributing editor, special to Light Reading