Telefónica Deutschland gains EU approval for E-Plus acquisition

Telefónica Deutschland succeeded in convincing European Commission (EC) regulators that a planned €8.6 billion ($11.7 billion) acquisition of KPN's German mobile business E-Plus will not harm competition in the country.

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Joaquin Almunia, EC competition vice president

The EC today cleared the deal on the condition that a package of measures will be adopted to allow new players to enter the German market after the consolidation of Telefónica Deutschland's and E-Plus' networks is fully implemented.

An EC statement reveals the commitments also strengthen the position of competitors Deutsche Telekom and Vodafone Germany, and were decisive in overcoming its concerns about the impact of the merger between the market's number three and four operators.

"The remedies to which Telefónica commits ensure that the acquisition of E-Plus will not harm competition in the German telecoms markets. Consumers will continue to enjoy the benefits of a competitive market," Joaquín Almunia, EC vice president for competition, stated.

As was widely predicted, Telefónica committed to sell up to 30 per cent of the merged company's network capacity to up to three mobile virtual network operators (MVNOs), and to divest spectrum and some assets to a new full network operator, or to the trio of MVNOs. Telefónica Deutschland revealed last week that existing German MVNO Drillisch will be one of the companies that will utilise the capacity.

Telefónica also agreed to extend existing wholesale agreements with it and E-Plus' partners to cover 4G, and to improve the ability of wholesale customers to switch network operators.

The EC said that the remedies address its competition concerns "taking due account of the different kinds of competitors and business models that are viable on the German market".

Hopes that clearance would be granted were raised in May when the EC approved a takeover of Telefónica's O2 Ireland business by Hutchison Whampoa subsidiary H3G. That deal also reduces the number of mobile network operators in Ireland from four to three, and was cleared after H3G made similar commitments to open access to the combined network to new players.

While clearance of the E-Plus deal is tipped to spark consolidation throughout EC markets, national regulators remain concerned the proposed remedies won't be enough to maintain competition in Ireland and Germany.

Meanwhile, French operators Bouygues Telecom and Orange today signalled that further consolidation in that market is unlikely in the near term, following a deal by Vivendi to sell its SFR mobile business to Altice-backed Numericable.

For more:
- read the EC statement

Related Articles:
Orange, Bouygues pour cold water on consolidation hopes in France
Telefónica grants network access to Drillisch to secure E-Plus merger approval
Report: Regulators up in arms over proposed approval of Telefónica's E-Plus buy
Vodafone, ComReg slam EC for clearing O2 Ireland acquisition
Germany's anti-trust body raises concerns over Telefónica/E-Plus plan

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