Vodafone Spain and MasOrange are reportedly exploring merging their mobile networks and setting up a joint venture, according to Spanish media Expansion.
The new JV would enable synergies in leasing space on towers, equipment, transmission and workforce. No figures on expected savings have been disclosed yet. Vodafone and MasOrange already have an active sharing agreement in place in Spain set up before the merger of MasMovil and Orange, which is in areas of the country where it's not economically viable to have two networks.
The new company would also allow for monetisation through the sale of a stake to a financial partner - an option which the MNOs have reportedly started to explore. Both operators are also looking for investors in their recently merged fibre infrastructures into a JV, however these two potential investments should be treated separately.
When mobile operators reduce costs, this directly affects towercos. One recent example from Spain is Vodafone Spain's new owner Zegona Communications attempt to renegotiate an EUR 50mn reduction in rent on leasing space on Vantage Towers where it is the anchor tenant.
Spain’s telecom market is already very competitive with three main MNOs operating at present and the majority of almost 40,000 towers owned by Europe’s four largest towercos. Towerco or tower consolidation could be one option moving forward or new forms of partnership between existing players could be another one, pending meeting regulatory conditions. As we’re now seeing competing towercos and MNOs starting to team up to improve connectivity across the continent (Vantage Towers, TOTEM, Telefonica and Orange for the ATLANTIC cross-border connectivity project), we may also see them team up at a more local country level dictated by cost cutting and improvement of future profitability.
As the telecommunications sector and European policy evolve, so do business models and partnerships. Could the new JV also extend that existing MasOrange- Vodafone sharing agreement to other areas of the country, including large towns and cities, or would it include anything else? Only time will tell.
