The Spanish government has followed the European Union in granting permission for two companies to combine to form the country's largest telecoms company, Digital Transformation Minister José Luis Escrivá announced in Madrid on Tuesday.
The merger of Orange España and MásMóvil will create a combined company with an estimated value of €18.6 billion ($20.3 billion), with the two holding equal stakes. The EU approved the merger last month.
France's Orange will place its entire Spanish unit, Orange España, in the new company, which has yet to be named. The location of its new head office has also not been made known.
"The outcome of this merger is the leading provider in Spain with more than 30 million mobile customers, with more than 7 million broadband customers and more than 2 million television customers," Escrivá said after the weekly Cabinet meeting.
The project would result in strong investment in the sector over the years ahead, he added.
The merger is expected to go through this quarter or at the beginning of the next. The new company may seek a listing.
There are currently four main providers in the Spanish mobile market: Movistar of the former monopoly Telefónica with 27.1%, according to the CNMC regulatory body, followed by Orange with almost 21.9%, Vodafone España with 21.6% and MásMóvil with 20.3%.
Britain's Vodafone announced in the autumn that it would sell its Spanish unit to London-based Zegona Communications for €5 billion. The deal has been approved by Brussels and is awaiting approval from the Spanish government. It is expected to be concluded by the summer.