MásMóvil denies contact with Vodafone over possible Spanish merger

Spanish alternative telecom operator MásMóvil has said it has had no contact with Vodafone following press reports that Vodafone was looking potentially to acquire it.

El Economista reported yesterday that the pair had been in contact in recent days over a possible combination, citing unnamed sources.

An acquisition of MásMóvil, the country’s number four operator, by Vodafone would establish the latter as the principal competitor to Telefónica in the Spanish market, ahead of Orange.

It would also potentially deprive Orange of a major customer, as MásMóvil leans on its network to reach a significant portion of its customer base.

The latest report comes a week after a majority of MásMóvil’s shareholders approved a takeover of the company by Lorca Telecom, a consortium backed by private equity groups KKR, Cinven and Providence. The group secured the support of 86.4% of the company’s share capital for its plan to take MásMóvil private, which valued the company at €2.96 billion.

While consolidation in the highly competitive Spanish market has long been anticipated, reports of Vodafone’s interest attracted  the scepticism of analysts at Jefferies, who believe a sale by Vodafone to a delisted MásMóvil is more likely – a scenario that has previously been reported on by El Economista.

Jefferies’ analysts believe it is unlikely that Vodafone would offer a large premium on top of the proposed private-equity takeover and noted that there has been no counter-bid for MásMóvil from Orange, also seen as a likely acquirer.

Jefferies also argued that bringing MásMóvil subscribers onto Vodafone’s cable network from Orange’s fibre net could be challenging and may lead to large-scale churn in the absence of long-term customers contracts.

Jefferies argues that delisting may also make it easier for MásMóvil to launch a bid as it would not have to offer stock as part of the deal, which is unlikely to be attractive to Vodafone.