Spain Plans to Push for Telecom Mergers During EU Presidency

Clara Hernanz Lizarraga and Rodrigo Orihuela, Bloomberg News

5G and 4G apparatus, manufactured by Ericsson AB, on a Telefonica SA telecommunication network mast in Barcelona, Spain, on Wednesday, Jan. 20, 2021. Telefonica's sale of telecommunication masts to American Tower Corp. opens a new front in the race to control Europe’s fast-growing tower industry. Photographer: Angel Garcia/Bloomberg , Bloomberg

(Bloomberg) -- Spain plans to push for consolidation in the European telecommunications market during its six month term holding the presidency of the Council of the European Union this year.

“Our main target is to contribute to the regulatory changes and necessary decisions for the leading operators in the European market to have the strength to be able to compete in the global market,” Telecommunications Secretary María González Veracruz said in an interview.

Spain will help in “every way it can” to bring about consolidation, she said, while declining to offer details.

Consolidation in European telecoms has long been touted as necessary to create larger carriers on a par with peers in the US and China. Companies such as Vodafone Group Plc and Orange SA have bought smaller rivals within the countries where they operate, but have been reluctant to join forces to create European champions.

Regulators in Brussels have opposed large deals, especially if tie-ups reduce competitors in a market from four to three. The proposed €18.6 billion ($19 billion) merger between Orange’s Spanish unit and Masmovil Ibercom SA is the subject of an in-depth investigation by the European Commission, with a decision due by late August. Spain’s government backs the deal.

EU members states take it in turns to hold the presidency for six months, with Spain’s term starting in July. Although presidencies don’t have executive powers, countries can try to use their position to set agendas for larger debates.

Pushing for consolidation requires balancing local, country-specific interests with Europe-wide strategy, González Veracruz said, as most countries want to have a large national carrier and many are reluctant to see them taken over by outside players.

Spain has been a vocal supporter of the telecom sector’s push for tech giants such as Meta Platforms Inc and Alphabet Inc to pay fees for the use of infrastructure, an initiative known as “fair share.”

Telefonica SA Chairman José María Álvarez-Pallete, who also heads the telecom industry group GSMA, is an advocate of the fair share proposal. He also has close working relationship with Spanish Prime Minister Pedro Sánchez and Economy Minister Nadia Calviño, who oversees telecom policy.

Spain is mulling whether to submit written support for the initiative, González Veracruz said, adding that the debate over fair share must be addressed urgently.

--With assistance from Alonso Soto.