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O2 Germany, E-Plus may move toward network sharing deal

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Telefónica's O2 Germany and KPN's E-Plus are considering a deal that could result in the two operators sharing their mobile networks by early next year.

However, the deal with E-Plus could stumble after O2 Germany told investors that it was talking with two out of its three rivals in Germany about possible network sharing agreements.

Commenting on previous suggestions that Telefónica Germany and E-Plus would form a close partnership or merger, O2 Germany CFO Rachel Empey, told investors in a conference call: "When people were looking at a potential coming together of Telefónica Deutschland and E-Plus, there was some significant analysis of potential network synergies. Quite a lot of those synergies might be available through network sharing."

The company also indicated to investors that this could divide the infrastructure Capex required for 800 MHz use with other German operators. O2 Germany, Deutsche Telekom and Vodafone each acquired spectrum in this band with the plan to provide LTE coverage to rural areas. E-plus decided not to bid for this spectrum during the auction.

Responding to the network sharing talks with O2 Germany, E- Plus spokesman Guido Heitmann told Bloomberg and Die Welt: "We're generally open to ideas for co-operation. Whenever we see opportunities, we'll have a closer look."

Documents seen by Bloomberg relating to the floatation of O2 Germany make reference to the possible cost saving of around €4 billion in a hypothetical merger of O2 Germany and E-Plus, Germany's third and fourth largest operators, respectively. KPN said last year that such a merger may generate €3 billion in synergy savings.

For more:
- see this Bloomberg article
- see this Die Welt article (translated via Google Translate)

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