Telecom group MasOrange explores initial public offering

Private equity funds that own Spanish telecoms group MasOrange are exploring an initial public offering (IPO) of the company next year, the Financial Times (FT) reported.

MasOrange, Spain's largest mobile operator, was created in a nearly 20 billion euro merger agreed in 2022 between French state-controlled Orange Espana and privately-owned MasMovil. Under the terms of the merger agreement, either party can trigger an initial public offering after a two-year lock-up period, which expires in April 2026.

MasMovil's owners - KKR, Cinven and Providence Equity Partners - are in preliminary discussions about options for the company, which could include an IPO in Spain next year, sources close to the matter said, quoted by the FT. They added that no final decisions had yet been made.

A MasOrange listing would provide some impetus to Europe's IPO market, which has been slow to recover after a post-pandemic "listing drought" that left buyout groups with a record pile of unsold assets.

If MasOrange were to go ahead, Orange would have the option to buy a controlling stake in the company at the IPO price, giving KKR, Cinven and Providence the chance to exit the company.

Kester Mann, head of consumer and connectivity at telecoms consultancy CCS Insight, said, according to the FT: "Given the company's performance is on track, interested parties may feel that now is the right time to invest in MasOrange."

Orange said the shareholder agreement gives it the right to trigger an IPO after April 2026, "if the conditions are right."

MasMovil, MasOrange, KKR and Cinven declined to comment on the FT's report. Providence did not immediately respond to a request for comment.

KKR, Cinven and Providence bought MasMovil in 2020 at a valuation of 5 billion euros, when the company was Spain's fourth-largest telecoms operator.

Separately, MasOrange is looking to sell a stake in a new fibre-optic company launched in January in partnership with Vodafone Spain. The company plans to create a network covering more than 12 million premises. MasOrange will own 50% of it, Vodafone Spain 10% and a new financial investor 40%. The deal is expected to close in the first half of 2025.