Orange agreed to divest a fibre network with a presence in leading Spanish cities, as well as giving wholesale access to its 4G network, in order to gain approval for its €3.4 billion acquisition of Spain’s Jazztel.
Orange will sell Jazztel’s fibre-to-the-home (FTTH) network which overlaps with its own infrastructure in Spain.
Jazztel’s network covers 720,000 homes across 13 urban areas in five of the largest Spanish cities: Madrid, Barcelona, Valencia, Sevilla and Malaga.
In addition, Orange has committed to enable the purchaser of the FTTH network to have wholesale access to Jazztel’s national ADSL network for up to 8 years. This commitment is for an unlimited number of subscribers and will allow the purchaser to compete immediately across more than three-quarters of the Spanish market.
The cost for wholesale access to Jazztel’s ADSL network is fixed at a level whereby the new player can compete as aggressively as Orange and Jazztel do today in fixed internet services.
Orange also agreed to offer the purchaser of the FTTH network wholesale access to its mobile network including 4G, unless the purchaser already has access to a mobile network.
This will be at conditions that are at least as favourable as those Orange currently grants to Jazztel.
The announcement by the commission confirms earlier speculation about the terms set for approval of the Jazztel deal, and shows Orange’s eagerness for a deal which means it can better match rivals Telefonica and Vodafone on fixed-mobile services.
“A very important thing before agreeing to Orange’s takeover of Jazztel was to make sure that consumers in Spain would not suffer from higher prices for fixed internet access services,” said competition commissioner Margrethe Vestager (pictured).
The deal brings together the third and fourth largest fixed operators in Spain. In addition, Orange is the country’s second largest mobile operator, and Jazztel runs an MVNO.
“With the remedies in this merger a new player may enter the market and compete as strongly as Orange and Jazztel do today,” Vestager added.
The deal is still subject to approval by Spanish regulator CNMV. Orange welcomed the EC authorisation, pronouncing itself “satisfied” by the concessions.
The Orange-Jazztel combination will, by the end of 2016, pass more than 10 million Spanish homes with its fibre offers. This deal is expected to generate total synergies for the combined business estimated at 1.3 billion euros, in particular through the savings achieved in operating costs and network investments, said Orange.