MADRID French telecom group Orange (ORAN.PA) has hired Bank of America Merrill Lynch (BAC.N) as an adviser on its strategy in Spain, including the possible acquisition of smaller competitor Jazztel JAZ.MC, two sources with knowledge of the matter said on Tuesday.
Orange came under increased pressure earlier this month to beef up its operations in the country following the announcement by Vodafone (VOD.L) that it had agreed to buy local cable company Ono.
Some analysts believe a recent price war in Spain to retain cash-strapped customers and years of falling company revenues are laying the ground for market consolidation.
"It's not only about advising Orange over the potential acquisition of Jazztel, but also over all its options," said one of the sources, confirming a report on website El Confidencial.
Orange boss Stephane Richard had said on Monday the group would likely adjust its operations in some European countries.
"Consolidation in Europe is happening in the mobile sector but will also be affected by convergence between fixed and mobile. Orange will take part," Richard told French newspaper Les Echos.
"There are countries in Europe where we operate only in mobile for now and where we will have to move."
Bank of America Merrill Lynch, Orange and Jazztel declined comment.
(Reporting by Robert Hetz and Sophie Sassard; Writing by Julien Toyer; Editing by Paul Day and David Holmes)