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MasMovil-Orange merger could impact current 5G experience in Spain

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The recent merger between MasMovil and Orange has had a significant impact on Spain’s telecom landscape. The two companies have joined forces to create a 50:50 joint venture called MasOrange, which now has the country’s largest mobile subscriber base and spectrum holding.

As part of the regulatory approval, both parties divested 60MHz of spectrum to Mobile Virtual Network Operator (MVNO) Digi, spread across three bands. This included 20MHz in the 3.5GHz band, which is crucial for 5G deployment. MasOrange still needs to dispose of 30MHz in this band, either by returning it to the state or selling it to another operator.

This analysis assesses our 5G users' experience on the 3.5GHz (n78) band and its usage across all four mobile network operators (MNOs) in Q1 2024, prior to the merger

        Key Findings:

  • Spain’s MNOs mainly rely on the 3.5GHz (n78) band to provide 5G — 50.8-59.4% of the 5G readings from our Spanish users come from this band.
  • The average 5G download speeds on 3.5GHz (n78) vary significantly across Spanish networks, with Movistar (Telefonica) users currently observing the fastest speeds and Vodafone users observing the slowest.
  • Movistar’s fast speeds, coupled with the fact that it currently comes top for five 5G experience awards in our latest mobile network experience report, means that while Movistar is interested in acquiring the excess spectrum, selling it to Vodafone could be a better option for MasOrange from a competitive standpoint.

Analyzing the distribution of 5G readings across different bands nationally, we see that our users in Spain connect to three bands: the two primary 5G bands — 700MHz (n28) and 3.5GHz (n78) — along with the 2100MHz (n1) band through the use of Dynamic Spectrum Sharing (DSS) technology. DSS enables the parallel use of 4G and 5G in the same frequency band by determining the demand in real-time. The 3.5GHz (n78) band offers wider bandwidth and supports higher capacity. On the other hand, low bands such as 700MHz provide excellent coverage, but the 5G download speeds may only be slightly better than 4G, as the band’s propagation characteristics are not generally used for improving capacity.

More than half of the 5G readings come from the 3.5GHz (n78) band. Orange and Yoigo show the highest proportion of 5G readings (59.3-59.4%) in this band, followed closely by Movistar (58.4%). Vodafone shows the lowest proportion of 5G readings (50.8%) in this band and the highest proportion of readings in the 700MHz (n28) band.

For Movistar, 28.3% of the readings come from the 700MHz (n28) band, dropping to 26.6% and 22.8% for Orange and Yoigo. The remaining readings are linked to the 2100MHz (n1) band across all four networks.

Our Spanish users across all four networks experience the fastest 5G download speeds on the 3.5GHz band. Movistar leads the pack with speeds almost reaching the 380Mbps mark, about 30% faster than Orange, 82% faster than Yoigo and more than twice as fast as Vodafone. Likewise, Movistar users also observe the fastest 5G download speed on the 700MHz (n28) band, while Vodafone’s score is again the lowest. 5G download speeds in Spain are proportional to the number of live 5G cell sites deployed by operators using the 3.5GHz (n78) band. Of all the live sites, Movistar has the most sites (24.7%) dedicated to 3.5GHz (n78), while Orange and Vodafone have 13.7% and 9.4%, respectively. Yoigo has a limited number of 5G sites deployed as it roams on Orange for 5G services.

After the merger, MasOrange held 190MHz in the 3.5GHz band, with 110MHz coming from Orange and 80MHz from MasMovil (Yoigo), before transferring 20MHz to Digi. Digi’s spectrum acquisition positions it as a potential fourth MNO, enabling it to deploy a hybrid network model, selectively building 5G infrastructure in high-density areas and relying on MVNOs or national roaming elsewhere. This move aims to preserve market competition and prevent excessive market concentration.

However, even if MasOrange divests an additional 30MHz spectrum, as required, it will still have 140MHz, making it the largest spectrum holding in the 3.5GHz band in Spain. In comparison, Movistar currently holds 100MHz, while Vodafone has 90MHz in this band. Although, Movistar is interested in acquiring the excess spectrum, which would bring its total holding to 130MHz, slightly lower than MasOrange. It might be better for MasOrange from a competitive standpoint if it sold the excess spectrum to Vodafone. This is because Movistar won five 5G experience awards outright in our latest mobile network experience report (January 2024) and we have previously shown that the larger the amount of spectrum deployed the better the user experience

The merger of MasMovil and Orange creating MasOrange is poised to reshape Spain’s telecom landscape. As MasOrange and its competitors adapt to the ongoing changes, the focus will likely shift towards enhancing network quality and expanding 5G infrastructure. We have seen in Italy that a merger between two operators can lead to a different split in the winners of our awards — in the four years prior to the Wind/3 merger, the two MNOs won almost no awards, but the combined entity, WindTre, has performed more strongly, winning or jointly winning four awards in each of the first two reports after the merger. 

The European Commission’s approval of the MasMovil-Orange merger may also have implications for MNOs in other European markets, such as Italy and France, which also have four MNOs. While the approval aims to safeguard market competitiveness through key measures like spectrum divestment and fair access agreements, Opensignal will continue to monitor the evolving market dynamics in Spain and its impact on users’ mobile network experience.