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Mergers & Acquisitions

E-Plus, O2 merger in the bag

The European Commission has cleared the way for telecoms giant Telefonica Deutschland to absorb rival E-Plus in an 8.6 billion-euro ($11.7 billion) deal that will forge Germany's largest mobile service provider.

E-Plus,O2 merger cleared

Regulators in Brussels attached caveats to their green light, however, saying prices for consumers must not rise on account of there being only three communications providers in the future instead of four in Europe's largest telecoms market.

The fusion will see Telefonica and E-Plus overtake Germany's current industry leaders in terms of customers, Deutsche Telekom and Vodafone, but one condition of the deal was that Telefonica permit smaller rivals to piggyback on its mobile network.

Industry mergers to boost revenue

Last week the company agreed to lease a fifth of its network capacity to smaller, so-called mobile virtual network operators, or providers who do not own their own networks and tend to offer cheaper contracts.

The planned merger comes as the telecoms industry faces its fifth consecutive year of sliding revenues and is turning to company fusions to prop up sales.

Although European Competition Commissioner Joaquin Almunia gave his blessing to Telefonica and E-Plus, regulators in Germany harbored doubts.

A spokesman for Germany's cartel office said a letter had been written to Almunia and other agencies, warning against the deal.

cjc/hg (Reuters, dpa)

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