The telecommunications sector in Spain is convulsed. Once the football war and its television rights are over, the turn of a second wave of consolidations has arrived. After the purchases of Ono and Jazztel by Vodafone and Orange, respectively, it is again the French who have all the cards to go on the market.
Orange + financial institutions
Although first there has been a false shot. Last week it emerged that Orange had hired the services of a financial institution to analyze a possible purchase interest of Euskaltel. But this Monday he has come out. In a statement sent to the National Securities Market Commission (CNMV) by the Basque group, it was made clear that the French “are not currently analyzing, either by themselves or through their advisers, an operation”. But in the final tagline of the statement, as well as the Orange accounts, it follows that there is something behind all this.
“Notwithstanding the above [in reference to the denial of Euskaltel], Orange is always analyzing options to grow in Spain.” Company sources assure MERCA2 that what is explained in said statement is the current situation of the operator; that is to say, it is not a generic formalism, but at the moment the telco is with an open range of corporate interests.
Orange denies some things, but makes it clear that there are interests in other
The key, now, will be to establish the address. And is that in such a transversal economy, where telephony operators have become reality in large digital content and services companies, their interests may go beyond Euskaltel itself or the always rumored MásMóvil.
Orange is sure to buy
Apart from the fact that the operator himself leaves all doors open to analyze growth options, the truth is that he has enough cash to do so. According to a Bloomberg report published last week, analysts estimate that Orange has a strong cash flow generation, which is accompanied by solid financial performance.
This, together with the fulfillment of the leverage objectives, which place the group’s debt at 1.9x per Ebitda, offers Orange an unbeatable framework for facing corporate activity. In fact, from Bloomberg they counter the bad performance of Deutsche Telekom and Vodafone in all these magnitudes to compare how these companies will not be able to carry out large movements soon.
Orange, at the moment, has multiple commercial interests that go beyond the telecommunications sector
Regarding possible interests, analysts rely on communications from the operating center where Orange estimates that there will be no major mergers or cross-border purchases, and that everything will focus on specific areas (as in the case of Euskaltel); or of specialized services and sectors, in the case of financial services.
In this context, it should be recalled that the French subsidiary has plans to start operating with Orange Bank throughout 2019. That is why, among Bloomberg analysts, the option of having the portfolio withdrawn to carry out an operation gains weight. in the financial framework. Although it is not something simple. First, because it would not be an ordinary entity, because of price and strategic issues; and, on the other hand, because not all fintech have the same market interest.
In addition, in all this puzzle we must see the role played by MásMóvil, which also has an interest in continuing to grow in some way; and, those forms, can clash directly with Orange’s.