STC & Telefónica Eye Spain's Avatel as M&A Opportunity After Big Orange-MásMóvil Deal

Saudi Telecom Company (STC) and Telefónica are each examining the possibility of acquiring Avatel, a rising Spanish telecom operator that has grown through acquiring about 155 smaller operators. Avatel is seen by market watchers as a target due to its growing quad-play services and the shifting competitive landscape in Spain.

STC, which already owns approximately 9.9% of Telefónica (4.9% direct plus 5% via derivatives), may use this move to establish a more direct presence in the European telecom market. Meanwhile, Telefónica itself is interested in Avatel as a way to secure or strengthen its wholesale supply role and protect its market footprint in Spain.

Avatel's value is estimated around €1 billion, a figure backed by its rapid expansion through integrating smaller regional providers and rolling out services in fixed broadband, mobile and other connectivity segments. Its growth has caught the attention of both domestic and foreign players.

The recent merger of Orange and MásMóvil, with its associated regulatory clearances (including remedies to protect competition), seems to have opened regulatory windows for further consolidation or acquisitions. Telefónica executives have hinted that post-merger, regulation in Spain may become more favorable—or at least offer greater predictability—for transactions like this.

STC's interest is also strategic: entering Spain via Avatel allows it not just to own an operator, but to potentially benefit from wholesale partnerships, spectrum assets, and the growing demand for fixed-mobile bundles. For Telefónica, acquiring Avatel consolidates its position and endows more control over infrastructure and customer base in key regions.

Spain's telecom market is being closely watched: as consumer expectations rise (fiber broadband, 5G, seamless services), scale and network investments become more critical. Any acquisition of Avatel by either STC or Telefónica would reshape competitive dynamics, broadband investment, and regional service quality.