Telefonica negotiating with MVNOs over E-Plus deal?

4 Jun 2014

Telefonica is in talks with smaller German mobile service providers as it seeks to secure European Union approval for its EUR8.55 billion (USD11.9 billion) acquisition of KPN’s E-Plus unit, Bloomberg cites people familiar with the negotiations as saying. According to the unnamed sources, the Spanish company is involved in negotiations with freenet, Drillisch and cable network operator Unitymedia KabelBW (owned Liberty Global), in order to investigate whether the companies would be interested in gaining access to its wireless network while building up their own hardware for data backhaul and billing. United Internet (1&1) is also reportedly talking with Telefonica about a guarantee of wholesale access to faster internet speeds; United Internet has a roaming agreement with E-Plus that includes transmission based on Long Term Evolution (LTE) technology. The sources said that concessions for the deal include allowing smaller operators to secure sufficient volumes and pricing from Telefonica using mobile bitstream access. Meanwhile, potential new infrastructure operators in Germany have until the end of the year to sign deals with Telefonica to purchase assets, two of the people said.

Netherlands-based KPN agreed to sell E-Plus to Telefonica in July 2013 and in December the European Commission (EC) opened an in-depth investigation into the transaction, TeleGeography’s GlobalComms Database notes. If approved, the combination of Telefonica and E-Plus 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. Late last month the EC extended the deadline for its decision on the deal by a further five working days to 10 July.