French telecommunications giant Orange SA (FR:ORA) and Spanish rival MasMovil are prepping to receive a conditional nod from the European Union (EU) on their long-pending merger. The two companies announced a €18 billion merger in July 2022 and are still seeking the EU antitrust’s approval.
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France-based Orange SA is a telecom and digital service provider with global operations. Orange is the second-largest telecom provider in Spain. Meanwhile, privately owned MasMovil is the fourth largest telecom provider in Spain, offering landline, mobile, broadband, and TV services to residential customers and businesses.
More About EU’s Conditional Approval
Since the announcement of the proposed merger, the European Commission has been reviewing the deal for its monopolistic nature. The EU warned that the combination of the two telecom giants would hinder competition and increase the prices of services for customers in the Spanish telecom market.
However, a Reuters report noted that the EU is set to grant a conditional nod to the pending merger. The two main conditions include Romania’s Digi Communications NV acquiring spectrum from MasMovil and entering a national roaming service agreement with Orange Spain.
Remarkably, the two conditions have already been met. In December, Digi announced that it had signed a €120 million spectrum transfer agreement with MasMovil. Plus, it signed an additional €20 million component with MasMovil. Further, it agreed to an option for a national roaming service agreement with Orange. The EU’s decision on the proposed merger is expected on February 15.
Telecom companies in Europe have urged the EU to loosen their strict policies related to consolidation in the sector. Should the merger be approved, it could open the paths for further consolidation in the European telecom industry.
Is Orange Stock a Good Buy?
Recently, Barclays analyst Mathieu Robilliard lifted the price target on ORA stock to €14.00 from €13.50 while retaining a Buy rating.
With five unanimous Buy ratings, ORA stock has a Strong Buy consensus rating on TipRanks. The Orange SA share price forecast of €12.77 implies 14.1% upside potential from current levels.
