UPDATE 1-Orange and MasMovil win EU approval for Spanish tie-up
(Adds EU antitrust chief and companies comment, details)
By Piotr Lipinski and Foo Yun Chee
BRUSSELS, Feb 20 (Reuters) - French mobile operator Orange and Spain's MasMovil on Tuesday secured EU antitrust clearance for a merger of their businesses in Spain after agreeing to sell spectrum to strengthen a rival.
The deal has been closely watched by the telecoms industry for clues on whether regulators will ease their tough line on mergers that reduce the number of mobile players from four to three. Telefonica is the biggest telecoms provider in Spain.
Orange said the deal, which has an enterprise value of about 18.6 billion euros ($20.1 billion), is now expected to be completed by the end of the quarter.
To get the deal between Spain's second and fourth-largest telecoms providers over the line, MasMovil will divest spectrum across three frequency spectrum bands to Romania's Digi , the largest mobile virtual network operator in Spain, so it can build its own mobile network.
Digi will also have an option for a national roaming agreement, confirming an earlier Reuters report.
"The commitments offered by the parties will enable Digi, the largest and fastest-growing mobile virtual network operator in Spain, to replicate the strong competitive pressure exerted by MasMovil," EU antitrust chief Margrethe Vestager said in a statement.
The EU competition enforcer had previously warned that the deal to create the largest operator by customer numbers in Spain may push up prices by more than 10% for consumers.
Vestager said on Monday that she was not going to loosen merger rules for telecoms deals, pitting her against EU industry chief Thierry Breton who said a fragmented market was one of the sector's biggest problems.
Still the Orange and MasMovil deal shows that companies will likely now have to offer valuable spectrum to boost rivals in return for the EU green light for their deals.
Chief executives of Orange and MasMovil cheered the EU approval, saying their deal would create a single, stronger, and more sustainable player in Spain with the scale to invest in 5G and fibre.
($1 = 0.9246 euros) (Reporting by Piotr Lipinski; Editing by Kirsten Donovan and David Evans)
