Communiqué : ORANGE and MASMOVIL sign an agreement to combine their
operations in Spain
Press releaseParis, 23 July 2022
ORANGE and MASMOVIL sign an agreement to combine their
operations in Spain
- Following the period of exclusive negotiations that began on
March 8th 2022, ORANGE and MASMOVIL (LORCA JVCO) have signed a
binding agreement to combine their businesses in Spain1.
- The transaction is based on an enterprise value of €18.6
billion, €7.8 billion for ORANGE Spain and €10.9 billion for
MASMOVIL.
- The transaction is subject to approval from antitrust
authorities and other relevant administrative authorities and is
expected to close during the second half of 2023 at the
latest.
As outlined in the prior announcement, the combination of the
activities of ORANGE Spain and MASMOVIL would take the form of a
50-50 joint venture co-controlled by ORANGE and MASMOVIL (LORCA
JVCO), with equal governance rights in the combined entity. The
agreement between parties includes a right to trigger an IPO under
certain conditions for both parties after a defined period and, in
such a scenario, an option for ORANGE to take control of the
combined entity at IPO price.
The joint venture between MASMOVIL and ORANGE will create a
sustainable player with the financial capacity and scale to
continue investing to foster the future of infrastructure
competition in Spain for the benefit of consumers and
businesses.
A joint venture between the two complementary businesses would
lead to significant efficiency gains, allowing the combined company
to accelerate investments in FTTH and 5G that will benefit Spanish
customers.
As part of the final agreement, ORANGE Spain’s enterprise value
is set at €7.8 billion (7.2x 2022E EBITDAaL and 37.1x 2022E
EBITDAaL – eCapex)2 and MASMOVIL’s (which includes the acquisition
of EUSKALTEL) at €10.9 billion (8.7x 2022E EBITDAaL and 14.9x 2022E
EBITDAaL – eCapex)2.
Due diligence conducted since March shows potential synergies in
excess of €450m per annum to be reached by the fourth year post
closing.
The transaction is supported by a €6.6 billion non-recourse debt
package that will finance, among other things, a €5.85 billion
payment up-streamed to the ORANGE Group and MASMOVIL shareholders.
This distribution to the shareholders will be asymmetric as it also
embeds an equalization payment in favor of ORANGE to reflect the
different levels of indebtedness of the two standalone businesses.
This debt package is mainly comprised of bank debt, provided by a
large pool of banks. MASMOVIL’s existing debt will remain in place.
Post closing, the financial policy agreed between ORANGE and LORCA
JVCO includes a leverage target of 3.5x net debt/EBITDA ratio to
facilitate an IPO of the joint venture in the medium term.
The transaction is subject to approval from antitrust
authorities and other relevant administrative authorities and is
expected to close during the second half of 2023 at the latest.
Until such approvals and closing conditions are satisfied, the two
companies will continue to operate independently.
Christel Heydemann, CEO of ORANGE, commented: “I am very happy
to announce the conclusion of these negotiations today. This deal
paves the way for the creation of a joint company that combines the
forces of ORANGE and MASMOVIL into a single, stronger operator that
will enable investments in 5G and Fiber, benefiting customers
across Spain. I strongly believe that the creation of this new
company is of fundamental importance for the Group, the Spanish
telecoms market and for our customers.”
Meinrad Spenger, CEO of MASMOVIL, commented: “This is a great
day for Spanish consumers as well as for our stakeholders. Together
with ORANGE, we plan to form a strong operator with a sustainable
business model and the capacity to invest in world-class
infrastructure, technology and talent. We anticipate this will
drive competition, digitization and innovation in the Spanish
market.”
More informationSee presentation on orange.com
(https://newsroom.orange.com/?lang=en) for the main facts and
figures concerning this transaction.
DISCLAIMERThis press release contains
prospects, hypothesis, estimates and other forward-looking
statements or anticipations that involve risks and uncertainties,
including references concerning expected future savings, synergies,
as well as its future positioning in the market, financial
structure, growth and profitability, which could cause actual
results to differ materially from those contained in such estimates
and forward-looking statements.Many of these risks and
uncertainties are related to factors that can be neither controlled
nor estimated with certainty, such as future market conditions,
approvals to be granted by relevant competent authorities, or the
responses from investors or other market actors and there can be no
assurance that anticipated events will occur or that the objectives
set out will actually be achieved. Forward-looking statements speak
only as of the date they are made. Other than as required by law,
there is no undertaking of any obligation to update forward-looking
statements in light of new information or future developments.
About OrangeOrange is one of the world’s
leading telecommunications operators with sales of 42.5 billion
euros in 2021 and 137,000 employees worldwide at 31 March 2022,
including 76,000 employees in France. The Group has a total
customer base of 278 million customers worldwide at 31 March 2022,
including 232 million mobile customers and 24 million fixed
broadband customers. The Group is present in 26 countries. Orange
is also a leading provider of global IT and telecommunication
services to multinational companies under the brand Orange Business
Services. In December 2019, the Group presented its new
"Engage 2025" strategic plan, which, guided by social and
environmental accountability, aims to reinvent its operator model.
While accelerating in growth areas and placing data and AI at the
heart of its innovation model, the Group will be an attractive and
responsible employer, adapted to emerging professions.Orange is
listed on Euronext Paris (symbol ORA) and on the New York Stock
Exchange (symbol ORAN).For more information on the internet and on
your mobile: www.orange.com, www.orange-business.com and the Orange
News app or to follow us on Twitter: @orangegrouppr.Orange and any
other Orange product or service names included in this material are
trademarks of Orange or Orange Brand Services Limited.
About MASMOVIL GroupMASMOVIL Group is the
operator that has led the growth in Spain for the last years which
offers fixed, Internet broadband, Mobile, tv and new services such
as 100% green energy, e-health, home security and personal finance
services for residential, businesses and wholesale through its main
brands: Yoigo, MASMOVIL, Pepephone, Lebara, Llamaya, Lycamobile and
Virgin telco and the regional brands Euskaltel, R, Telecable, Embou
and Guuk.In Portugal, MASMOVIL owns the brand Nowo which offers
fixed, and mobile services for residential customers.The Group has
fixed FTTH networks and 3G,4G and 5G mobile network infrastructure.
It has a coverage of more than 27M available fiber households and
18M with ADSL, and its 4G/5G mobile network covers 98,5% of the
Spanish population.MASMOVIL has launched its 5G services covering
more than 900 cities in the Spanish territory. The Group has close
to 15 million mobile and fixed services in Spain after the
Euskaltel acquisition.MASMOVIL has achieved zero net carbon
emissions in 2020, positioning as the first telecommunications
operator in Europe to achieve such a goal and the lowest absolute
residual level emissions. In addition, it is the first
telecommunications operator in Europe to become a B-Corp
Company.MASMOVIL is participated by Cinven, KKR and Providence
Equity Partners since November, 2020 with the aim of accelerating
the investment strategy of the Group.
Follow us: MASMOVIL Group website:
https://www.grupomasmovil.com/ Twitter:
https://twitter.com/grupomasmovil
Press contacts: ORANGE Group - Tom Wright;
tom.wright@orange.com; +33 6 78 91 35 11ORANGE Spain – Beatriz
Valverde; beatriz.valverde@orange.com; +34 616 093 913MASMOVIL
Group – Fernando Castro; fernando.castro@masmovil.com; +34 656 160
378
1 The contemplated transaction does not include notably TOTEM
Spain and MASMOVIL Portugal.2 ORANGE multiples proforma, post TOTEM
carve-out. MASMOVIL multiples proforma including acquisition of
EUSKALTEL (based on EUSKALTEL run-rate synergies).
- PR_Orange_Masmovil_signing_EN_230722
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