Spain: Orange bids €3.4 billion for Jazztel

orangeIn another major potential consolidation of the Spanish market Orange has bid €3.4 billion for Jazztel. If the takeover is finally successful, the new company will become the second biggest fixed-line broadband operator in the country, the third in mobile with 13.7 million mobile users (behind Vodafone with 14 million) and a tough competitor to Telefonica and Vodafone-ONO in the convergent services market.

The bid is subject to the approval of Jazztel’s shareholders and the competition authorities. This is the second largest concentration move in the Spanish telco market since the Vodafone’s takeover of ONO, the largest cable operator in the country for €7.2 million. Market leader Telefonica has increasingly pushed discounted bundles of fixed, mobile services and TV to boost the take up.

Orange has launched an offer to acquire Spanish broadband operator Jazztel in a bid to compete with its two main rivals Telefonica and Vodafone. The agreement, which values Jazztel at €3.4 billion, follows months of rumours that Orange had intensified its search for acquisition targets in Spain to avoid being left out of the country’s telecoms market consolidation. The French operator made an offer for 100 per cent of Jazztel shares at €13 per share in cash, which Orange said was 34 per cent more than Jazztel’s average closing price in the last 30 days. The deal is subject to regulatory approval as well as to Jazztel shareholders tendering at least half of the stock on top of an almost 15 percent stake held by executives who have agreed to sell, including chairman Leopoldo Fernandez Pujals.

Commenting on the bid, Orange’s CEO Stephane Richard said the operator had decided to move to accelerate its growth in Spain, particularly in fixed-mobile convergent offers. “The new company will be the incontestable number two in fixed services and third in mobile behind Vodafone, but we think we’ll be able to take second-place pretty quickly,” he told Reuters. Earlier he commented in a conference call that Orange and Jazztel were “the combination of two success stories in Spain”, adding that “with the economy recovering, it’s the right time to reinforce our presence.” He said the combination would generate additional revenue and cost savings amounting to €1.3 billion.

Jazztel, which uses Orange Spain’s network to provide its mobile service, currently has around 1.5 million broadband customers and a further 1.5 million mobile customers. It’s also set to reach a total of 160,000 fibre customers by the end of the year and has plans to accelerate its fibre deployment to reach 3 million homes by the end of 2014 and 7 million by 2017.

 

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