EC verifying Telefonica Germany/Drillisch deal

28 Aug 2014

The European Commission (EC) is said to be examining the deal struck between Telefonica Germany and mobile virtual network operator (MVNO) Drillisch to ensure it is line with the commitments made by the former to gain regulatory approval for its EUR8.55 billion (USD11.9 billion) acquisition of Dutch telecom operator KPN’s German mobile unit E-Plus.

As previously reported by CommsUpdate, earlier this month it was revealed that Drillisch, through its wholly-owned subsidiary MS Mobile Services, had concluded a mobile bitstream access (MBA) MVNO agreement with Telefonica Germany on 20 June 2014. Under the deal, Telefonica said it would grant MS Mobile access to up to 30% of the network capacity that is available after its merger with E-Plus, for all present and future technologies. The basic term of the agreement is five years, though this can be extended by means of two five-year call options held by MS Mobile. In return, MS Mobile agreed to take over at least 20% of the present and future network capacity for new customers for the basic term of five years, using a glide path.

Now, according to Total Telecom, which cites EC spokesman Antoine Colombani: ‘The Commission needs to verify whether the buyer and the commercial conditions negotiated fulfill the requirements set out in the commitments, and to approve the buyer.’ While there had been some speculation in local media that the EC was in fact planning to re-examine the entire Telefonica/E-Plus deal, Mr Colombani has seemingly put paid to such rumours, noting that the analysis of the Telefonica/Drillisch deal is standard procedure and stating: ‘The Commission is not re-examining [the Telefonica/E-Plus] case.’

While there has been no indication of a timeframe for a decision regarding the suitability of the agreement between Telefonica and Drillisch, the spokesman has confirmed that the EC will disclose its conclusions once they have been reached.