October 23, 2019 / 6:38 AM / 24 days ago

Vodafone and MasMovil deny holding tie-up talks in Spain

MADRID (Reuters) - Both Vodafone (VOD.L) and MasMovil (MASM.MC) denied a report by the El Confidencial news website saying the Spanish mobile operator was working with Goldman Sachs to buy the British telecom’s business in Spain for 6 billion euros (£5 billion).

FILE PHOTO: Branding hangs outside a Vodafone shop in Oxford, Britain, May 16, 2017. REUTERS/Toby Melville/File Photo

MasMovil and Goldman Sachs have held talks with the world’s second largest mobile operator regarding its Spanish business, the Spanish website reported, citing unnamed sources close to the talks.

El Confidencial said MasMovil, which has grown significantly in recent years via acquisitions in many cases financed by the U.S. investment bank, last summer submitted a non-binding offer rejected by Vodafone, which instead asked for 8 billion euros for its Spanish unit.

The website added that consultancy firm McKinsey was also involved and in charge of a strategic plan which estimated cost savings, or synergies, of 2 billion euros.

“MasMovil is not working on a process to buy, merge or create a joint venture with Vodafone Spain,” a MasMovil spokesman said.

A Vodafone spokesman said: “There is no truth whatsoever in speculation that Vodafone is in talks with MasMovil.”

“The speculation about asking for 8 billion euros, or any number, is simply untrue,” he added.

“Vodafone has never solicited an offer for Vodafone Spain or indicated to anyone that there is a particular price at which it would be willing to sell the business.”

Vodafone has a market value of about 50 billion euros while MasMovil is worth 2.95 billion euros, up around 15% so far in 2019, Refinitiv data showed.

The deal as reported would create a company worth around 9 billion euros and reduce to three the number of domestic operators with operations spanning the whole Spanish market alongside Telefonica (TEF.MC) and France’s Orange (ORAN.PA).

Analysts at Sabadell said there would be many obstacles to such a deal.

“With this operation the market would go from four operators to three and therefore probably for regulatory approval remedies would be required limiting the attractiveness,” the Spanish broker said.

SPANISH STRUGGLES FOR VODAFONE

Vodafone is struggling in Spain where its service revenue fell 9.3% in the first quarter, its worst performance in any major market and worse than the 7.9% fall in the previous quarter.

The company blamed steps it had taken to improve its competitiveness and its decision not to renew unprofitable football rights.

It has introduced new tariffs, including unlimited data bundles in both its mobile-only and package offerings for the first time in Spain, but promotions by rivals saw it lose 158,000 mobile contract customers, 49,000 fixed broadband customers and 24,000 TV customers.

Reporting by Andres Gonzalez and Paul Sandle, writing by Jose Elías Rodríguez; editing by Jason Neely and Kirsten Donovan

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