How do we bridge the digital divide? The chairman of the frontrunner to acquire Orange-MásMóvil merger remediesexplains how, and why his market is drawing in GCC investors

Amid untrammelled commercial activity in pursuit of Vision 2030, telecoms players in Saudi Arabia have looked to Europe as a growth prospect. Last year, STC took a 4.9% stake in Spanish operator Telefónica, and Tawal, a subsidiary of STC, acquired the infrastructure of United Group in Bulgaria, Croatia, and Slovenia. The kingdom’s Gulf neighbour, the UAE, has engaged in similar activity in the bloc. In 2023, its incumbent telco e& (formerly Etisalat) bought a range of assets in Bulgaria, Hungary, Serbia, and Slovakia from the Czech Republic’s PPF Group. It has also built up a substantial stake in Vodafone. And in 2021, Abu Dhabi’s sovereign investor Mubadala poured millions of dollars into UK network provider CityFibre.

Jorge Gómez is Chairman of Avatel Telecom, which has become a key player in the future of the fluctuating European telecoms sector.

“Gulf investors are drawn to the vibrant competitive atmosphere of Europe’s telecom markets, aware that across the EU, network rollouts, especially those for 5G, are gathering steam and need investment,” he said, citing “predicted market consolidation” as a further incentive.

Across the EU, Avatel has earned a reputation as a market disrupter. Starting out in 2011, the company was based in Spain’s Costa del Sol, a tourist hotspot swarming with expatresidents. Quality Internet services were “virtually non-existent”, according to Gómez. Avatel leveraged partnerships to fill the connectivity gap, first in Costa del Sol, thenthroughout Spain. Growth came at a breathless rate. Mergersand consolidation added the resources and capabilities of more than 130 companies to Avatel Telecom’s stable. Today, the company employs upwards of 2,000 and operates some 300 points of sale in more than 1,000 towns across its native Spain.

“Our strategy is one that many Middle East market players see as the future,” Gómez said. “We seek to bring Internet accessto unserved and underserved communities. It is marvellous that we humans have connected so many of our planet’s inhabitants to what is now a global community and a global economy. But at Avatel, we firmly believe nobody should be left behind. And so, we have committed ourselves to bridging the digital divide.”

This strategy of deploying convergent services to boost the economic participation of rural communities and smaller businesses appears to have paid off. Avatel has risen to become a major player in arguably the most important transaction in the global telecoms sector – the merger in Spain between Orange and MásMóvil.

“The significance of the Orange-MásMóvil deal cannot be overstated,” said Gómez. “These are two giants bonding, heralding great changes in Spain, but also prospective tremors at the supranational level.”

Because of the scale of the newco, the European Commissionmay require it to auction off assets in the form of remedies.According to Gómez, Avatel is a frontrunner to acquire these assets, largely because of its track record in expansion throughout Spain and its proven financing capacity.

“Growth, for us, happens wherever we find opportunities,” he explained. “We have a strong reputation for organic growth, but if we find ourselves in a position such as we do now with the Orange-MásMóvil merger remedies, we shall always pursue these options. From the start, we have made a strong case that we are better positioned to secure these remedies than others. We are in favour of a tough remedy scenario – spectrum, fibre assets, brands, even customers. With our low debt ratio, we have the resources and financing capacities that will allow us to absorb all of it.”

If successful, Avatel plans to leverage the remedies to provide high-quality convergent services. Gómez argues that this is“exactly the kind of community-centric outcome the European Commission envisions when it calls for remedies”.

“Avatel gets the opportunity to become more competitivewhile bringing much-needed competition to a flagging market,” he said. “Everybody wins.”

Spain is one of the leading nations in fibre penetration. Fibre-to-the-home (FTTH) rollouts have gathered pace in the past few years as telcos and network providers have targeted rural areas. Gómez considers Avatel to have led the way in this push.

“We are proud to have pioneered the drive to bring convergent services to rural areas,” he said, “and to have convinced the industry of the need for quality offerings at reasonable price points to allow for long-term business sustainability.”