French telco Orange and Spain's MásMóvil have paved the way to an €18.7 billion ($20.5bn) plan to merge their Spanish arms, by signing a deal to sell some assets to Romania's Digi Communications, according to reports.

The two big telcos announced their plan to merge in Spain, back in July 2022, but the EU had concerns over competition in the country. It was reported last month that they had chosen to meet European regulators' demands by selling some assets to Digi

Orange Spain shop
– Getty Images

Bloomberg's sources say the two have reached a preliminary non-binding agreement which would meet EU competition concerns. The deal could be signed by the end of the year, Bloomberg reports.

It's not clear which assets will be, but spectrum licenses are likely to be included.

The merger would consolidate the Spanish market from four major operators to three, by combining the second-largest telecom provider (Orange) with the fourth-largest (MásMóvil).

Earlier this year, the European Commission, said such a deal would reduce competition and increase costs in Spain, and warned the operators would have to address a number of competition concerns before any approval is given.

Digi already operates in Spain and has said it plans to expand there through an investment of €2 billion ($2.15bn) if it's allowed access to assets freed up by the merger.

"We will invest €2 billion in Spain if we get the 'remedies' from Orange and MásMóvil," said Digi CEO Marius Varzaru in September.

Since launching in the country back in 2008, Digi now has more than 5.7 million customers in Spain, as of the first half of this year.

The operator offers mobile services through an MVO agreement with Spanish telco Telefónica.