Telefonica sees potential for asset purchases in Spain after losing No.1 status

MADRID (Reuters) - Telefonica expects regulators to allow it to buy assets from rivals in its home country as it is set to lose its status as the largest local operator due to a merger between Orange's local unit and Spanish company MasMovil.

Since it was privatised in the 1990s, the former state-owned telecom monopoly was all but barred from growing through acquisitions by anti-trust regulators due to its dominant position in Spain.

"The regulation has to adapt to the fact that Telefonica is no longer the leader in the wholesale market," Chief Operating Officer Angel Vila told Reuters on Thursday, urging more flexibility around possible asset acquisitions in the future.

The 18.6-billion-euro merger, which was authorised earlier this week by the European Commission, will create an operator larger than Telefonica in terms of clients.

Besides Telefonica and Orange-MasMovil, the other large telecom operators in Spain are Vodafone, Romania-based Digi and privately-owned Avatel.

(Reporting by Inti Landauro, editing by Andrei Khalip and Jane Merriman)