Masmovil to buy Yoigo and create Spain's fourth converged player

Masmovil agreed to buy 100 per cent of Yoigo in a deal it said valued the Spanish mobile operator at €612 million ($689 million), and outlined its plan to create a new fixed and mobile player on what is already a highly converged market.

The company, which beat UK-based Zegona in the battle to secure Yoigo, is buying the 76.6 per cent majority stake owned by Telia Company and the remaining shares from local minority shareholders ACS, FCC and Abengoa. Masmovil added that according to Telia's accounting principles, Yoigo has an enterprise value of €625 million.

The move comes only a day after Zegona said it would continue to pursue an acquisition of Yoigo in spite of the uncertainty caused by the emergence of a rival bidder prepared to offer a higher price. Zegona had been unable to reach agreement with Yoigo's minority shareholders, although Telia had accepted its offer.

Masmovil's deal is still subject to approval from the Spanish competition authority, but the company said it expects the transaction to be completed before the end of 2016.

Meanwhile, Masmovil has lost no time in setting out its priorities for the future.

The company previously acquired Pepephone, which has around 460,000 mobile customers and 35,000 ADSL clients, and also picked up some of Jazztel's fibre assets following Orange's acquisition of the fixed-line player. It now services 750,000 building units with its FTTH network and is targeting 2.3 million in three years. It also has access to Jazztel's DSL network for at least four years.

"The acquisition of Yoigo (and Pepephone) will allow Masmovil to strengthen and consolidate its position as fourth national telecommunications operator in Spain with 4.2 million mobile clients and around 70,000 broadband clients," Masmovil said

It added that the merger with Yoigo will create a company with revenue of €1.1 billion and EBITDA of €108 million, and will generate savings of about €370 million.

Spain has already seen the creation of three fixed and mobile giants: the incumbent operator Telefonica, Orange Spain after its Jazztel buy, and Vodafone Spain, which also owns cable operator Ono.

Pablo Tomasi, an analyst at IHS Technology, said Masmovil now needs a well-defined strategy to compete in a very difficult market

"All competitors have strong bundled propositions, inclusive of TV offerings and high-speed fixed broadband, leveraging extensive FTTH or DOCSIS 3.0 cable networks," he said. "Low-priced bundles of fixed and mobile services could help the operator, by providing more appealing offers to price-sensitive segments of the population."

As for Telia, its president and CEO, Johan Dennelind, said the sale of Yoigo forms part of the company's strategy to focus on its operations in the Nordics and Baltics.

"I am happy that we have an agreement with Masmovil, who will be able to leverage a small but great and agile team into a combined unit, creating an even stronger challenger in the Spanish market," Dennelind said.

In a separate announcement, Telia's Sonera unit said it has also made an offer to buy 100 per cent of a fixed network operator in Finland called Anvia Telecom for €130 million. However, Anvia said it still backed an offer from Elisa of €107 million for its telecoms, IT and hosting businesses.

For more:
- see Telia's announcement on the Yoigo sale
- see Masmovil's announcement on the Yoigo acquisition
- see Masmovil's presentation
- see Sonera's announcement on Anvia
- see the Anvia statement (in Finnish)

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