Orange Marriage – MásMovil: new (smaller) map of “telcos” in Spain

Orange Marriage – MásMovil: new (smaller) map of “telcos” in Spain

MadridThe telecommunications game board in Spain will change from now on. Specifically, their parts will do that. After Brussels' final approval of the merger between Orange and MásMóvil, the sector will move from four to three large companies: Movistar (Telefónica), Vodafone and the group resulting from the merger between the French and Spanish companies. In 2022, the four companies represented 80% of the market share in terms of retail income, according to data from the National Commission for Markets and Competition (CNMC). The remaining 20% ​​is in the hands of a group of secondary operators, popularly called de Low costWhich has gained strength in recent years.

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After the merger, this big picture of the industry won't change much, but its leadership will. Telefonica, teleco The Spanish company, headed by José María Álvarez Ballete, will not be the leader in the country, at least in terms of the number of customers and coverage of fiber optics and mobile phones, and for the first time in history it will be the second operator. “We still feel strong to compete with a stronger competitor,” Palit said this week during the company’s 2023 annual results presentation.

The marriage between Orange and MásMóvil will create a group that will initially be formed as a strategic alliance (joint project) Its total value will be approximately 19,000 million euros. But this is not the only result of a process that raises ghosts such as the concentration process, something that supervisory bodies have previously watched with a magnifying glass so that it does not happen. In absolute numbers, the union of Orange and MásMóvil will mean a total of 7.3 million broadband customers, 30 million mobile customers and 2.3 million pay TV customers.

New leadership

Spain, like the vast majority of countries in the region, has telecom operators that bear the weight of market share. Initially, in terms of income, 80% was shared between Movistar (39.1%), Vodafone (14.7%), Orange (15.7%) and MásMóvil (10.3%). The remaining 20% ​​of the fees are borne by you Low costThis is according to the latest sectoral economic report for telecommunications and audiovisual for the year 2022 by the National Media Centre. Among these names such as Digi, Lyntia, Adamo, or Avatel.

As with revenue, the pattern repeats itself if customers are noticed. In two of the main operator activities, mobile and fixed broadband (Internet), the Big Four Telecom It reaches more than half of the market share, as shown in the graph. In fact, in the case of mobile, OMVs (virtual mobile operator) accounted for 8.3% of the market share in December 2023. As for broadband, operators Low cost They made up 8%.

But the weight of the grain is decreasing. If you just look at the three historical operators, Movistar, Orange and Vodafone (MásMóvil was born as a strong operator in 2016 and consolidated in 2021), and you look at the annual balance sheet, in 2017 they had a broadband market share of 90%, while in 2022 it was 73.6%, according to the CNMC report. As for mobile phones, the trend was the same.

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Ghost focus

“Everyone expected it a little bit,” predicted the head of the Financial Investment Advisers Group at the Economist College of Catalonia, Begonia Castro, who emphasizes that at the moment “it is effective to have a certain reduction in the number of players because there is no capacity or market for many.” “Focus disappears when there is a lower limit of the range [d’opcions]”, points out the economist.

In reality, You don't have to look back far to find an example of this reduction in player numbers. Until 2016, MásMóvil was one of the OMV companies that became the fourth mobile operator after its acquisition of Yoigo, which had its own network, Llamaya and Pepephone. In 2018, he bought Lebara, also a company Low cost Lycamobile and finally in 2021 acquired Euskaltel. “There are always times of business prosperity, but over time, there is a reorganization process,” Castro adds. For the Organization of Consumers and Users (OCU), such a process would involve “competitor withdrawal and the reduction of substitutes”, and they warn that they will be alert to the impact it may have on customers, in product prices and terms. Products. The organization indicated in a statement issued this week that he “remains one of the unknowns.”

In the 1990s, Europe decided to liberalize the telecommunications sector in order to bring operators to the surface, i.e. so that there would be more competition and this would have the effect of lowering prices. But if Brussels took so long to decide on Orange and Masmovel, it was precisely so as not to take a step back in this direction. In fact, it's a conditional process for which the Digi Worker acts as an additional hero.

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Digi, indirect winner

Orange and MásMóvil have to give up part of their business to the Romanian company Digi, which in recent years has gained a lot of business and customers in Spain due to its prices. Low cost. In particular, two medium frequency bands and one high frequency band, which will allow it to have its own telecommunications network (until now it has not had one and had to rent it from Telefónica).

However, in the Spanish case, according to the 2022 CNMC report, “competitive dynamics” remained real and results in terms of prices, quality and variety remained “favourable”. However, these matters “cannot be understood” without taking into account the existing regulation and actions of the regulatory body, which companies like Telefonica are calling for to be dropped because they see that the scenario, precisely, is very different from what it was three decades ago. Castro does not expect a scenario of disorganization: “We cannot forget that communication is a basic necessity.” The expert points not only to prices, but to one outstanding challenge: good implementation in rural areas.

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