Telefónica close to gaining approval on E-Plus German bid

European competition regulators are reportedly on the brink of clearing Telefónica's planned €8.6 billion ($11.7 billion) acquisition of E-Plus in Germany.

Joaquín Almunia, the head of the EU's antitrust unit, is happy with proposals submitted by the Spanish telecoms company that would enable new players to enter the German market to maintain competition in the country, the Wall Street Journal reported.

Telefónica has reportedly offered to open up 30 per cent of a combined Telefónica Deutschland and E-Plus network to three virtual network operators, to address the EC regulator's concerns about the deal, which would cut the number of mobile network operators from four to three.

A similar pledge by Hutchison Whampoa was recently pivotal in the company securing approval for a €780 million acquisition of Telefónica Ireland by its local business H3G. That deal, like Telefónica's proposed E-Plus acquisition, will reduce the number of full time operators in Ireland from four to three.

At the time, Ovum analyst James Robinson noted the clearance in Ireland is a positive sign for Telefónica Deutschland's chances of gaining clearance for the E-Plus buy. "The EC's decision regarding the takeover in Ireland could be a signal that it is ready to accept some in-market consolidation, despite usually favouring the disruptive nature of smaller players such as Free Mobile in France," he said.

Telefónica has also courted other mobile operators to replace E-Plus as the fourth full mobile network operator in Germany in a bid to win approval for the deal. The company was pursuing a tie-up with cable company Liberty Global's German business Unitymedia, and telecoms companies Freenet and Drillisch, Bloomberg reported early June.

Even if the EC regulator clears the E-Plus acquisition, Telefónica still faces a nervous wait for final approval from 27 other EU commissioners, the Journal reported, adding that such clearance is usually a formality.

For more:
- see this Wall Street Journal article

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