E-Plus buy catapults Telefonica to top tiers

Telefonica is set to become Germany’s dominant mobile provider, after agreeing a €5 billion acquisition of Netherlands operator KPN’s local cellco, E-Plus.
The buy out is expected to close in 1H14, and will create a cellular operator with 43 million subscribers when combined with Telefonica’s existing German mobile unit. Combined revenues for the two businesses stand at €8.6 billion, and the deal also propels Telefonica to the position of Europe’s number two operator in terms of total subscribers.
Telefonica will fork out €4.14 billion of the agreed price, with its German subsidiary financing the remainder. Once completed, the Spanish telco will own 65% of the new company, and KPN 17%, with the remainder to be sold in the open market.
The deal will cut the number of mobile operators in Germany to three – Deutsche Telekom, Vodafone, and the combined O2/E-Plus -, however Ovum principal analyst, Emeka Obiodu, says consolidation in the highly competitive market is inevitable
“As the third and fourth players, O2 and E-Plus did not have the scale to adequately compete in a market where ferocious price competition has led to declining revenues and profits for telcos… Without a deal, they would have been operating in a market where Vodafone has just strengthened, and Deutsche Telekom enjoys the advantage of being the mobile market leader and the owner of a high-speed fixed broadband network.”
Obiodu also notes the E-Plus acquisition mimics Telefonica’s strategy in Brazil, the largest market in Latin America, where it bought local operator Vivo in 2010.

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.