Telefonica has reportedly offered to help create a fourth German mobile operator in its efforts to secure regulatory approval for its proposed acquisition of E-Plus.
The Spanish incumbent is offering to lease the rival about 40MHz of higher-frequency…
Telefonica has reportedly offered to help create a fourth German mobile operator in its efforts to secure regulatory approval for its proposed acquisition of E-Plus.
The Spanish incumbent is offering to lease the rival about 40MHz of higher-frequency spectrum – about a seventh of that held by Telefonica Deutschland (O2) and E-Plus combined – the Financial Times reported, citing a confidential document.
The spectrum would cover up to 50% of the population in urban areas. For other areas, Telefonica is offering a commercial roaming agreement, capped at 10% of its network. This offer lapses if no expressions of interest are received by the end of the year.
The European Commission (EC), currently conducting an in-depth, phase II investigation of the €8.55bn (US$11.7bn) deal, recently sent a questionnaire to rival German operators asking whether they think the offered concessions are enough to maintain healthy competition in the domestic market. Questions are said to include whether the transfer of customers or brands would enable a new operator to be able to compete effectively.
In addition, Telefonica is offering to allow up to three MVNOs to access its network at wholesale rates and to sell 10,000 cell sites (8,000 initially) and 50 urban shops.
People involved in the talks are cited as saying they expect difficult negotiations to ensue. The Brussels-based authority reportedly wants a package that would prove more attractive to a new entrant, perhaps involving transferring customers and more spectrum, as well as greater certainty. In its questionnaire, the EC asks whether a network-sharing agreement with a new entrant would better enable it to compete effectively.
The deal would reduce the number of players in the German mobile market from four to three and, as such, the antitrust review is being closely watched throughout the EU, with many predicting an approval could trigger a wave of consolidation deals.
Telefonica submitted its improved commitments for the deal last week, prompting the Commission to further extend its phase II review from 28 May to 23 June 2014.
