Orange gets EU green light to buy Jazztel after agreeing fibre sale

Orange won approval from the European Commission (EC) for its proposed €3.4 billion ($3.8 billion) acquisition of Spanish broadband provider Jazztel, noting that the deal is expected to generate cost savings of around €1.3 billion for the future combined entity.

The acquisition, which was first announced on Sept. 15, 2014, is still subject to the approval of the Spanish stock market regulator CNMV. However, Orange will be relieved to have been given the green light from the European Union's governing body ahead of the June 1 deadline set by the EC, even though the company has been forced to make a series of commitments to secure EU approval.

As part of the agreement with the Commission, Orange will sell a fibre network representing 720,000 homes. The company added that the network is largely composed of redundant connections between the existing networks of Orange and Jazztel. It did not reveal which company is buying the network, although previous reports have named Yoigo, the market's smallest mobile operator, mobile virtual network operator (MVNO) Masmovil and regional cable companies Euskaltel and R as potential buyers.

Orange said its proposed acquisition of Jazztel "aims to give rise to the second-largest fixed broadband operator and one of the most dynamic players in the Spanish mobile market."

The company added that it plans to "significantly" accelerate fibre deployment in Spain in the coming years, noting that it will be able to offer fibre services to more than 10 million households by the end of 2016.

Orange, which already sells converged bundles of fixed and mobile services under Orange Kangaroo, wants to buy Jazztel to improve its standing in a market with a strong heritage in multi-play strategies. Telefónica Movistar led the charge here with the quad-play Fusion plans that combine mobile services with fixed voice, broadband and TV, along with value-added services such as data sharing and free access to content. Yoigo also sells multi-service plans under the Fusion brand as part of an agreement with Movistar.

Vodafone Spain had marketed a loosely converged fixed and mobile offering under Vodafone Integral. However, the company expanded its fixed assets with the acquisition of cable operator Ono last year and has now launched a new converged offer under Vodafone One.

Available since Apr. 20, Vodafone One provides packages of fibre, mobile broadband and TV services together with inclusive Wi-Fi access. This places it in direct competition with Movistar and ups the pressure on Orange Spain.

For more:
- see this Orange release

Related Articles:
EU to decide on Orange's planned Jazztel acquisition by June 1
Orange to spend €15B on networks to drive recovery by 2018
EC's Vestager hints at closer scrutiny of future operator consolidation
EC rejects Spanish bid to review Orange's €3.4B Jazztel offer

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