Digi Communications NV has reached a preliminary agreement to acquire the assets that French telecommunications group Orange and Spanish operator MasMovil plan to sell in Spain, so that they can receive approval from the European Commission to merge, writes Bloomberg.
The deal could be signed by the end of the year, ending months of negotiations, a source told Bloomberg who asked not to be identified because the talks are private. The preliminary agreement is not binding, said the person. No final decision has been made, and the companies could still decide not to move forward with the deal.
But the deal could help Orange and Masmovil meet European regulators' requirements for their merger in Spain. The new business could be worth 18.7 billion euros.
The European Commission expressed concern that the association between Orange and Masmovil would have too great a negative impact on competition. The deal is expected to create a new dominant telco in Spain and reduce the number of major mobile operators from four to three. To remedy this situation, the Commission encouraged companies to sell assets, including part of their licenses for the use of mobile spectrum.
Digi, which provides mobile phone and broadband services through wholesale agreements, was the Commission's preferred buyer, people familiar with the matter said in September. Regulators had originally set an August 21 deadline to make a decision, though they suspended the process in late July, saying more information was needed. The proposed merger is being watched closely across the industry as it will provide signs of how the European regulator views consolidation in the market.
Orange, Digi and Masmovil press officers declined to comment.
The deal could be signed by the end of the year, ending months of negotiations, a source told Bloomberg who asked not to be identified because the talks are private. The preliminary agreement is not binding, said the person. No final decision has been made, and the companies could still decide not to move forward with the deal.
But the deal could help Orange and Masmovil meet European regulators' requirements for their merger in Spain. The new business could be worth 18.7 billion euros.
The European Commission expressed concern that the association between Orange and Masmovil would have too great a negative impact on competition. The deal is expected to create a new dominant telco in Spain and reduce the number of major mobile operators from four to three. To remedy this situation, the Commission encouraged companies to sell assets, including part of their licenses for the use of mobile spectrum.
Digi, which provides mobile phone and broadband services through wholesale agreements, was the Commission's preferred buyer, people familiar with the matter said in September. Regulators had originally set an August 21 deadline to make a decision, though they suspended the process in late July, saying more information was needed. The proposed merger is being watched closely across the industry as it will provide signs of how the European regulator views consolidation in the market.
Orange, Digi and Masmovil press officers declined to comment.
