Masmovil wins approval to buy Yoigo in Spain

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Spain is set to gain its fourth converged fixed and mobile player

Masmovil has won regulatory approval to buy 100 per cent of Yoigo in a deal it previously said valued the Spanish mobile operator at €612 million ($689 million).

Spain's communications and competition regulator CNMC approved the acquisition without imposing any special conditions, thus paving the way for the creation of a new fixed and mobile player on what is already a highly converged market.

CNMC said it “applauds the introduction of new mobile operators that help increase competition in the provision of retail mobile communication services”, and clearly welcomed the introduction of new competition in the area of fixed-mobile convergence (FMC).

Masmovil, which beat UK-based Zegona in the battle to secure Yoigo, said in June that it was 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 had an enterprise value of €625 million.

The company has also 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 [the] fourth national telecommunications operator in Spain with 4.2 million mobile clients and around 70,000 broadband clients," Masmovil said in June.

It added that the merger with Yoigo will create a company with revenue of €1.1 billion and EBITDA of €108 million, and 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, has previously noted that 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."

For more:
- see the CNMC release (in Spanish)

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