By Foo Yun Chee

BRUSSELS French telecoms group Orange and Spanish peer MasMovil have picked Romania's Digi to buy assets they plan to divest to address EU antitrust concerns over their Spanish tie-up, two people with direct knowledge of the matter said on Tuesday.

The deal is seen as an important test case of whether EU antitrust regulators will relax their tough approach towards mergers that shrink the number of mobile players in a country from four to three. Regulators worry that this may reduce competition.

Orange and MasMovil, the second and fourth largest telecoms providers in Spain, announced the deal which has an enterprise value of 18.6 billion euros ($19.7 billion) in July 2022.

The European Commission in June warned the companies that the deal, which will reduce the number of mobile players in Spain from four to three, may reduce competition and push up prices in Spain.

The EU competition enforcer, which halted its investigation into the deal in July while waiting for the companies to provide requested information, and MasMovil declined to comment on Tuesday.

Orange did not immediately respond to requests for comment.

Orange and MasMovil plan to divest spectrum, a customers unit and a brand as well as offer Digi access to infrastructure, the people said.

Orange and MasMovil, which compete with Telefonica and Vodafone in Spain, had been talking to a number of potential buyers of the assets including Digi, Avatel and other smaller rivals in recent months.

Digi has expanded rapidly in the Spanish market since it launched operations there in 2008. It had more than 5.7 million customers at the end of the first half of 2023.

($1 = 0.9440 euros)

(Reporting by Foo Yun Chee; Editing by Mark Potter)