Orange and MasMovil have chosen the Romanian company Digi as the buyer of the assets they intend to divest in order to address European Union concerns over the two operators' planned merger in Spain, Reuters learned on Tuesday from two sources.

This agreement between the French telecoms group and its Spanish counterpart is seen as an indicator of the positioning of European competition regulators, who have so far taken a strict line on mergers reducing the number of mobile operators in a country from four to three - a situation regulators fear will limit competition.

Orange and MasMovil, Spain's second and fourth-largest telecom groups respectively, announced in July 2022 that they had agreed to a tie-up worth an estimated 18.6 billion euros.

Last June, the European Commission warned the two groups that the deal would reduce the number of mobile operators in Spain to three, and that this could have the effect of reducing competition and driving up prices in the country.

The European competition regulator, which suspended its investigation in July pending further information from the two groups, and MasMovil declined requests for comment.

No immediate comment could be obtained from Orange.

According to people familiar with the matter, Orange and MasMovil plan to spin off a frequency, a consumer division and one of the brands, while offering Digi access to infrastructure.

Orange and MasMovil, whose main rivals in Spain are Telefonica and Vodafone, have been in discussions with several potential buyers for their assets in recent months, including Digi, Avatel and other smaller competitors.

Digi entered the Spanish market in 2008, and has since rapidly expanded its presence in the country. By the end of the first half of 2023, the Romanian group had more than 5.7 million customers in Spain. (Reported by Foo Yun Chee; French version Jean Terzian, edited by Kate Entringer)