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Spectrum concessions offered by Telefonica for E-Plus deal, report says

15 Apr 2014

Spanish telecoms group Telefonica is offering to lease some spectrum to a rival German mobile operator in a bid to secure European Commission (EC) approval for its proposed EUR8.55 billion (USD11.9 billion) acquisition of E-Plus, the Financial Times reports. Netherlands-based KPN agreed to sell E-Plus to Telefonica in July 2013 and in December the EC opened an in-depth investigation into the transaction, which if allowed would reduce the number of network operators from four to three, with the enlarged Telefonica becoming the market leader ahead of Telekom Deutschland and Vodafone Germany. According to a 28-page confidential document seen by the FT, Telefonica is offering to lease a rival a relatively small amount of higher-frequency spectrum to help create a fourth rival to replace E-Plus. The proposed remedy allegedly extends to up to 50% population coverage in urban areas and about 40MHz of spectrum, while for the rest of the country Telefonica is offering a roaming agreement on commercial terms, but with a cap of up to 10% of its network. Alongside the concessions to make way for a fourth operator, Telefonica has pledged to provide space on its network at wholesale rates for up to three mobile virtual network operators (MVNO), while also offering to sell 8,000 base stations initially, followed by an additional 2,000 sites at a later date, as well as 50 shops in urban areas. The EC has sent out the concessions being offered by Telefonica to rivals to gauge whether or not they would be sufficient to maintain an effective level of competition in Germany, the FT adds. The EU competition authority has indicated that it plans to make a decision on the deal by 23 June.

Germany, E-Plus Group, KPN, Telefonica, Telefonica Deutschland Holding

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