Orange has secured the European Commission’s approval of its EUR 3.4 billion takeover of Spanish broadband operator Jazztel after agreeing to a series of concessions designed to address competition concerns by creating a fourth major player in Spain. Orange’s commitments will “ensure that a new operator can enter the Spanish market and be able to compete effectively in markets involving fixed internet access services,” said the EC in a statement. The EU’s antitrust commissioner Margrethe Vestager added that the remedies would allow a new player to compete as strongly as Orange and Jazztel so that “consumers in Spain would not suffer from higher prices for fixed internet access services."
Orange won the EC’s approval by agreeing to divest an independent FTTH network covering 700,000-800,000 households in Madrid, Barcelona, Valencia, Seville and Malaga, five of the largest Spanish cities. In addition, Orange committed to grant the purchaser of the FTTH network wholesale access to Jazztel’s national ADSL network for up to eight years, a commitment that would allow the purchaser to compete immediately on 78 percent of Spanish territory, said the EC. Finally, the buyer would also be given wholesale access to Orange’s mobile network including 4G services if it does not already have access to a mobile network.
Although no details were provided about the possible buyer of the divested assets, Nicolas Laederich, an executive who handles regulatory affairs and competition issues for Orange, last week told Reuters that the operator had already had contacts with several interested parties and that the remedies in no way undermined the attractiveness of the Jazztel acquisition for Orange. According to the Spanish press, the main candidates are Yoigo, currently Spain’s fourth largest mobile operator, albeit with a market share of just 6 percent, and fast-growing MVNO MasMovil.
In a statement welcoming the EC’s decision, Orange reiterated its target to save EUR 1.3 billion in costs from total synergies arising from the deal while committing to accelerate its fibre-optic broadband rollout to reach 10 million Spanish households by 2016. Buying Jazztel gives Orange a further 1.6 million broadband subscribers and nearly 2 million mobile customers to help boost its convergent offers. Orange’s current mobile customer base stood at 12.8 million at the end of the first quarter while its fixed broadband customer base was just over 2 million.
