Telefónica Considers Acquiring Vodafone's Spanish Unit Amidst New Strategic Plan

Telefónica is reportedly considering a takeover of Vodafone's Spanish unit, with CEO Marc Murtra preparing to unveil a strategic plan in the autumn that includes the potential acquisition. The plan is allegedly supported by key Telefonica shareholders, including Spain's state holding fund SEPI and Saudi Telecom Company. The deal would require approval from Spain's competition regulator and the European Commission.

Telefónica, S.A. (BME:TEF) is reportedly considering a takeover of UK Vodafone Plc's (LON:VOD) Spanish unit, according to El Confidencial. The Spanish telecommunications giant has been exploring potential acquisitions as part of a new strategic plan set to be unveiled by CEO Marc Murtra in the autumn. The plan, which includes the potential acquisition of Vodafone's Spanish unit, is reportedly supported by key Telefonica shareholders, including Spain's state holding fund SEPI, investment group CriteriaCaixa, and Saudi Telecom Company (STC) [1].

The acquisition would require approval from both Spain's competition regulator and the European Commission. While the deal could face regulatory hurdles, it is seen as a strategic move to strengthen Telefónica's position in Europe. The Spanish market is a significant one for Telefónica, and acquiring Vodafone's Spanish unit could provide a competitive advantage.

Telefónica's shareholders are reportedly in favor of the move, provided the transaction is priced appropriately. The Spanish government, through SEPI, and other major shareholders are backing the deal, suggesting a strong consensus within the company. However, the price could be a sticking point, as UK-based Zegona Communications acquired Vodafone Spain for €5 billion just over a year ago [3].

The deal would consolidate the market from four facilities-based players to three, which could face opposition from the European Union. The EU has historically opposed market consolidation, especially when it leads to a significant reduction in competition. The merged entity would also dominate the B2B space, which could trigger competition remedies from the EU.

Marc Murtra has other potential targets in mind, including 1&1 in Germany and other targets in the UK. If the deal with Vodafone's Spanish unit faces regulatory challenges, Murtra has these alternatives up his sleeve. The new strategic plan will build upon the cost-cutting measures implemented by his predecessor José María Álvarez-Pallete.

References:
[1] https://www.marketscreener.com/news/telef-nica-s-a-reportedly-considers-a-possible-takeover-of-vodafone-plc-s-spanish-unit-ce7c50dcd988f124
[3] https://www.telecoms.com/operator-ecosystem/telefonica-shareholders-reportedly-back-vodafone-deal-1-1-also-an-option