BRUSSELS (AP) — In a deal that creates Germany's biggest mobile phone company in terms of customers, the European Union's antitrust authority on Wednesday approved network operator Telefonica's bid to buy its competitor E-Plus under certain conditions.
The move comes as analysts argue Europe's fragmented telecommunications sector needs consolidation to shoulder the investments needed for faster networks and to offset losses from the EU's crackdown on lucrative surcharges leveled on cross-border use of mobile phones, so-called roaming fees.
Telefonica agreed to purchase E-Plus from Dutch telecommunications company Royal KPN NV in a cash and stock deal estimated at about 8.5 billion euros ($11.6 bilion). Telefonica, a Spanish company, plans to merge E-Plus with its own German arm, O2.
For the merger to go through, Telefonica must sell upfront up to 30 percent of the merged company's network capacity to service providers to boost competition in Germany's mobile market, the EU Commission said.
Telefonica must also sell some assets and improve conditions offered to service providers. Those firms sell mobile phone contracts without having their own network, relying on wholesale agreements with incumbent operators.
The merger will bring together E-Plus, currently Germany's No. 3 operator with about 23 million customers, with O2 — the fourth-biggest with some 19 million customers. The merged company will have a market share of about 30 percent in Germany, the Commission said.