From MASMOVIL to MASORANGE: the telecom challenger that became the number one player

In late 2020, Cinven funds invested in MASMOVIL after a protracted process, with private equity peers KKR and Providence Equity Partners. “We were about to launch the takeover process publicly on 13 March – just as the world was locking down against Covid,” says Jorge Quemada, co-Managing Partner at Cinven. “That delayed us and, eventually, the process kicked off in the summer.”

The deal team took courage during these unusual times from the work Cinven’s regional team had already put in. Led by Quemada, Cinven had tracked MASMOVIL for a while, learning that the company was well-placed for growth in a difficult market.

“The total market was going down in value, so we really needed to understand what the company had to do in that space to grow. It’s a combination of the right marketing, the right operations and the right third-party agreements. MASMOVIL had to believe that we knew what to do. Having senior representation locally was vital,” explains Quemada.

Working from home, the Cinven team collaborated with its co-partners to successfully orchestrate what, at the time, was the largest public-to-private deal in Spain, at an enterprise value of €5.3 billion. Together, the investors saw an opportunity to grow MASMOVIL in what was a relatively mature market, where attracting new customers meant getting them to switch service providers and increased revenues would have to come from investing in new services and acquisitions.

“Before MASMOVIL merged with Orange, there were two real milestones: the take private in November 2020 and the acquisition of Euskaltel, the Basque telecoms group, in March 2021,” explains Thomas Railhac, Partner at Cinven and head of its TMT sector team. “That acquisition gave the company more heft, made it a stronger competitor to the big three – Telefonica, Vodafone and Orange – and put it in a better position for the coming consolidation.”

Dialling it up

MASMOVIL was founded in 2006, aiming to be the most competitive mobile operator in terms of price and quality to maximise customer satisfaction. In under a decade, it had listed on Spain’s alternative market and made several acquisitions. By the end of 2016, it had 4.4 million customers and revenues exceeding €1.1 billion. The next move was to list on Spain’s main market – becoming the first company to achieve promotion. By 2020, when Cinven funds invested, MASMOVIL had 11 million mobile customers and a fibre network serving 22 million households.

“Its growth had always been phenomenal,” says Miguel Segura, a Cinven Partner. “The calibre of the management is second to none. When Cinven funds invested, our role was to support them to accelerate the story.”

With its new private equity backers, MASMOVIL could afford to roll out 5G technology, acquire Euskaltel, which was integrated in record time, launch new add-on services in 100% green energy, health, alarms, insurance and personal loans, and upgrade its fibre-optic network. All while it maintained its focus on being competitive and on customer service.

Sustaining the tone

But growth was not the only priority for the three investors supporting the MASMOVIL team. Equally important was to grow sustainably and act in a socially responsible way. During the pandemic, for example, the company helped keep Spain connected and safe, donating equipment and SIM cards to families in need, as well as donating face masks to hospitals and nursing homes. The following year it became Europe’s first telecoms company to achieve verification of its social and environmental performance with B Corp validation and it hit its net-zero carbon milestone.

“Cinven has an excellent, experienced ESG team that management could draw on. We and our co-investors were very much aligned on helping management maximise value, and sustainability and responsibility were key to that. We all agreed on the strategic core of what we were trying to achieve. It made decision-making very straightforward,” explains Segura.

Fulfilling the ambition

In any mature market, growth and value creation are harder to come by. MASMOVIL had already driven much of the consolidation to date, buying smaller companies. Its next stage involved exploring buying or merging with another company. Enter Orange Spain, the Spanish arm of international telecoms operator Orange, in July 2022.

“The merger with Orange was very synergistic in terms of optimising costs and the network,” says Railhac. “We worked out MASMOVIL could achieve more than €500 million savings a year, which would allow it to accelerate expanding the offer.”

The deal, cleared by competition authorities in February 2024, created MASORANGE, a company with an enterprise value of €18.6 billion – €10.9 billion for MASMOVIL and €7.8 billion for Orange – in a 50/50 joint venture led by Spenger as CEO. By then, MASORANGE had more than 37 million broadband and mobile lines, making it Spain’s number one telecoms company within two decades, and one of the top 20 Spanish companies by revenue. Cinven and its private equity partners remain investors.

Looking ahead, management’s strategy with the support of its investors is to increase its 5G coverage to more than 90% of the population, expand its fibre-optic network and add new services.