Telefonica Deutschland (O2) expects to receive a statement of objections (SO) from the European Commission today to its €8.6bn (US$11.7bn) acquisition of KPN’s German mobile unit E-Plus.
Speaking on a conference call on O2’s full-year results,…
Telefonica Deutschland (O2) expects to receive a statement of objections (SO) from the European Commission today to its €8.6bn (US$11.7bn) acquisition of KPN’s German mobile unit E-Plus.
Speaking on a conference call on O2’s full-year results, co-CEO Markus Haas said the company intends to analyse the SO, which sets out the EC’s concerns about the deal, carefully and continue “constructive” talks in Brussels.
The company remains confident, he said, that the deal – which would reduce the German mobile market from four to three players – will receive regulatory clearance in Q2 this year and close shortly afterward.
He argued that there is a “very strong case” to approve the merger, contending that it would improve competition in the domestic telecoms sector. Germany is the clear European leader in terms of mobile wholesale access with an established and sustainable MVNO market, he noted, adding that there is no indication this would change post-merger.
Haas also argued that the merged entity would be in a much better position to provide the continued investment in technology that the shift from voice to data services demands.
The CEO said Germany cannot be compared with other markets, calling for “apple to apple comparisons” and more “fact-based” discussions on M&A in Europe.
But he commented that reports, linking the reduction in players in the Austrian mobile market from four to three to price increases, are inaccurate.
Asked about spectrum auctions, Haas said he does not expect one to be held in Germany this year, noting that he expects regulators to see what happens with the E-Plus transaction first.
The issue of an SO does not necessarily mean a deal will not receive regulatory clearance. Hong Kong-based Hutchison Whampoa’s takeover of Orange Austria was subject to such a document and eventually approved in January 2013, although the process was drawn out and significant remedies were required. The EC has also issued an SO to Hutchison’s planned €780m takeover of O2 Ireland.
The next key step in an EC phase two procedure after the issue of an SO is usually an oral hearing, during which third parties, such as the German Federal Cartel Office, also have a voice. The hearing takes place about two weeks after an SO has been issued.
The companies will have an opportunity to offer improved remedies at a later stage in the process.
