Telefónica gets final EU approval for E-Plus deal

Telefónica Deutschland has received final clearance from the European Commission for its €8.6 billion ($11.3 billion) acquisition of German rival E-Plus from KPN, after it was deemed that a mobile wholesale agreement previously announced with German company Drillisch complies with the agreed conditions for the deal.

Conditions to secure European Union approval of the E-Plus acquisition included a commitment by Telefónica Deutschland 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.

In order to smooth the regulatory path, Telefónica had pre-empted this condition by agreeing in June to provide network capacity to German MVNO Drillisch. Under the agreement, Drillisch is to acquire 20 per cent of the capacity of all mobile networks that will be under the control of Telefónica Deutschland following the completion of the E-Plus acquisition.

This 20 per cent will be reached via a glide path mechanism over a period of five years. In addition, Drillisch shall have the right to acquire up to 10 per cent additional capacity of those networks, Telefónica added.

Now that the Commission has accepted that the deal with Drillisch is compliant after what looks to have been a brief examination of the matter, Telefónica Deutschland will be able to continue with its plan to merge O2 Germany with E-Plus in order to create a much stronger rival to Deutsche Telekom and Vodafone Germany.

"With the final clearance of the European Commission now granted, we are able to close the transaction soon, and create a leading digital telecommunication company in Germany," said Markus Haas, CSO of Telefónica Deutschland.

The company said it remains confident it will be able close the acquisition during the third quarter of 2014. As a next step Telefónica Deutschland said it will execute the capital measures to finance the transaction.

For more:
- see this Telefónica Deutschland release

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