The European body said the approval is conditional upon full compliance with a commitments package offered by Orange and MasMovil

The European Commission has approved the proposed creation of a joint venture by Spanish telcos Orange and MasMovil.

In a release, the European body said the approval is conditional upon full compliance with a commitments package offered by Orange and MasMovil.

During its in-depth investigation, the commission said it gathered extensive information and received feedback from market participants and other stakeholders. Following its investigation, the body said it had concerns that the transaction, as initially notified, would restrict competition in the retail markets for the supply of mobile and fixed internet services in Spain, whether offered standalone or in bundles.

However, to address the commission’s competition concerns, Orange and MasMovil committed to divest spectrum held by MasMovil to Spanish MVNO Digi Communications across three frequency spectrum bands, two medium frequency bands (1,800 MHz and 2,100 GHz) and one high frequency band (3.5 GHz). The mobile spectrum to be divested will enable Digi to build its own mobile network.

The two carriers also committed to enter an optional national roaming agreement, which Digi can decide to use or not. The possibility to use the JV’s network will complement Digi’s own network, which Digi will start rolling out with the use of the divested spectrum.

“This decision also approves Digi as a remedy taker following a careful review of Digi’s business plan with the help of an independent adviser. Digi is a suitable purchaser for the divested spectrum as it is currently the largest and fastest-growing MVNO in Spain. Digi also has experience as a mobile network operator in other EU Member States such as Romania,” the commission said.

“After collecting the feedback from a wide variety of market participants during a market test of the proposed commitments, the commission concluded that they fully address the identified competition concerns and will preserve a competitive telecom market in Spain, both in terms of price and quality, as well as in terms of 5G network deployment, to the benefit of consumers,” it added.

The JV was initially announced in July 2022. Orange previously said the 50:50 joint venture with MasMovil would have a customer base of more than 7.3 million in the fixed market and 30 million in the mobile sector. The two telcos expect to realize synergies of €450 million ($ 486 million) per year from the fourth year after closing.

“Orange and MásMóvil’s joint venture threatened competition in the retail supply of mobile and fixed internet services in Spain. But the commitments offered by the parties will enable Digi, the largest and fastest-growing mobile virtual network operator in Spain, to replicate the strong competitive pressure exerted by MasMovil. They will ensure that consumers in Spain continue to benefit from a competitive telecom market, in terms of prices, quality and 5G connectivity,” said Margrethe Vestager, executive vice-president of the European Commission in charge of competition policy.

In a release, Orange CEO Christel Heydemann highlighted that the announcement “is a crucial moment for the future development of the Orange Group in Europe” adding it would “create a single, stronger and more sustainable player in Spain”.

Orange and MasMovil said they expected the transaction to be fully completed by the end of the first quarter of the year.