It was in 2001 when corporate operations began in Spain in the telecommunications market. In 2001 Vodafone took control of Airtel and left the British BT out of the mobile telephony market. In 2005 France Telecom bought 80% of Amena for 6.4 billion euros and Santander sold Auna Cable to ONO. In the middle of the technological bubble, operators paid huge amounts of money to fully enter a business that at that time was billionaire. ADSL had just landed in Spain and mobile phones were becoming fashionable with an exorbitant price per minute or text message that translated into strong quarterly growth in all companies.
Telefónica was at ease at that time and alternative operators were slowly beginning to grow. In 2007 Vodafone bought the Swedish Tele2 to fully enter the fixed-broadband market for 775 million and in 2014 the firm acquired ONO for 7.2 billion. As of today, the market price of Vodafone is well below all the investments made in Spain.
Orange he’s not going through his prime, either. After the purchase of Jazztel in 2014 and after several sweet years in our country, the French operator has entered into losses worldwide because it has had to provision 3.7 billion in Spain due to the deterioration of the value of its business. The total capitalization of the operator is 25,000 million euros and that is 30% less than just two years ago.
As for Telefónica, the operator chaired by José María Álvarez-Pallete has managed to rebound 15% in the stock market compared to last year but the capitalization is still far from the objectives set by the board of directors, which aims for the shares to be listed at the best above of 8 euros in the coming years.
Fusion as a solution
Despite MasMóvil’s takeover bid for Euskaltel, the telecommunications market will continue to be stressed by the price war. Digi mobile is the leader in portability and continues to grow wildly. The problem? Digi is not for sale and is that its owner Zoltán Teszári, is one of the most important fortunes in Romania with more than 400 million assets. MásMóvil also has no intention of suppressing trademarks and that is because the yellow operator continues to perform well in the market with sustained growth in Pepephone, Yoigo, LlamaYa, etc. The only solution for the sector to recover value is through new mergers between the big companies.
MásMóvil and Vodafone
Both companies were close to merging months ago and according to sources in the sector 500 million euros it was the difference that prevented integration. The British operator valued its business at 8 billion while the funds that owned MásMóvil offered 7.5 billion. Will there be new opportunities in the future?
Orange with Vodafone
The merger between the two giants seems more unlikely but not impossible. At the moment, both companies are already working on the creation of a unified mobile network that will allow significant savings in infrastructures and since 2019 they have already deployed mobile and fiber networks together in towns with up to 175,000 inhabitants.
Orange with MásMóvil
The permanence of Orange is Spain is evident because it is the operator’s second market. The possibility of Orange buying MásMóvil does seem more unlikely due to the size of the investment and because the owners of the yellow operator may not be there for the work. However, the future of the sector and the more than probable erosion of margins could draw any scenario. The reality is that Spain needs a strong telecommunications sector not only because of technological progress, but also because of the contribution of operators to GDP and job creation.