Masorange plans to invest 4,000 million in 3 years, with more resources for networks

Masorange , the new telecom resulting from the merger of Orange and MásMóvil, plans to invest 4,000 million in the next 36 months, as announced yesterday by Meinrad Spenger , the new CEO of the merged company. This figure represents an average of 1,333 million, which is 12% more than the sum of the investments of Orange (755 million) and MásMóvil (437 million), with a combined investment of 1,192 million in 2023. That is, that figure of 4,000 million is the product of adding to the usual Capex (material investment) of the two companies, -1,200 million for three years represents 3,600 million- the credit line already agreed upon – but not yet drawn down, so it does not count in the debt – 600 million euros for incremental investment in networks .

However, Spenger explained that the new Capex of the resulting firm will be of “higher quality”, since a part of the investment that is allocated to commercial activity in the homes of new clients will be reduced. Each time a new user is acquired, it costs about 500 euros for the operator – a new fiber installation must be carried out and the router changed, along with the technician’s labor – which are included in the Capex, although this Capex is not being used to deploy or modernize infrastructure.

But from now on, Masorange intends to drastically cut this Capex, because when a client switches from one brand of the group to another, it is intended that no change will have to be made – neither in the fiber connection nor in the router, and therefore it will also be saves the cost of the home visit – in the user’s home. Sector sources estimate that for a company with the group’s customer base – 7.3 million broadband customers – and the level of turnover in the Spanish market, it can mean savings of more than 200 million euros per year.

More Capex quality

For this reason, Spenger speaks of a “higher quality” Capex, since those 200 million that are not used in homes can be allocated to new investments in infrastructure. That would mean about 600 million in the next three years, which together with the other 600 million line of credit, would add up to 1,200 million incrementally, that is, almost a third more than under normal conditions.

What Spenger was not so specific about was the concrete fruit of that budget, since he only revealed that he plans to deploy fiber networks in “up to 6 million additional homes” , a figure advanced by EXPANSIÓN on March 12. Starting from the 17 million own homes with which Masorange was born, Spenger specified that it would mean “going from 17 to 23 million more or less”, in the hypothesis of maximum deployment.

Potential fixed network agreement with Movistar

But the new group is also considering deepening its commercial relationship with Telefónica , with co-investment projects in fiber. In this way, in some areas where it would now make sense to deploy as it has more market share, instead of building a second fiber in parallel to that of Movistar, Masorange would pay Telefónica a part of the cost incurred for its deployment. This would allow commercial relations to be reconsidered, so that Masorange could use Telefónica ‘s fiber, almost as if it were its own, paying a much lower wholesale price. This solution is based on the conviction of both parties that there is already too much fiber deployed in Spain and that it is not necessary to make more redundant investments.

90% 5G coverage

That is why analysts believe that a good part of the planned additional investment will be directed more towards 5G networks, the real pending issue for Spanish telecoms , than towards fiber optics.

Regarding its investment in 5G, Masorange announced that it plans to increase 5G coverage to above 90% of the population. The problem with this announcement is that it does not specify what type of coverage these figures will be reached with. Both Orange and MásMóvil (like Movistar) have until now been counting as 5G coverage that obtained with the DSS system, which is a 4G “doped” with software. Therefore, its real 5G coverage figures with the 700 MHz and 3.5 GHz bands – which are predetermined by Europe to provide services with this new technology – are not public.

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