Telefónica Deutschland Gets European Commission Clearance To Acquire E-Plus

(RTTNews) - The European Commission said Wednesday that it has approved the proposed acquisition of Dutch Telecom operator Royal KPN NV's (KPN, KKPNY.PK, KKPNF.PK) German mobile telecom business E-Plus by Telefónica Deutschland Holding AG, a part of Spanish telecommunication group Telefónica S.A. (TEF, TDE.L).

According to the Commission, the approval is conditional upon full implementation of a commitments package submitted by Telefónica.

It was on July 23, 2013, that Telefónica Deutschland agreed to acquire E-Plus from KPN. The merger would bring together the third and fourth largest mobile network operators or MNOs in Germany. The acquisition will put Telefonica Deutschland on par with market leaders such as Deutsche Telekom AG (DTEGY) and Vodafone.

The deal will see KPN receiving 3.7 billion euros in cash and an initial stake of 24.9 percent in Telefónica Deutschland.

In last December, the European Commission had opened an in-depth investigation, to evaluate Telefónica Deutschland's proposed acquisition of E-Plus for competition concerns as per the EU Merger Regulation.

The European Union antitrust regulators were concerned that the deal may reduce competition in the markets for retail mobile telephony and for wholesale access and call origination in Germany. Both these companies provide mobile telephony services in Germany via their own respective mobile networks.

However, Telefónica submitted commitments to address these concerns, ensuring that new competitors will enter the mobile telecommunications market in Germany and that the position of existing competitors is strengthened.

Joaquín Almunia, Commission Vice President in charge of competition policy stated, "The remedies to which Telefónica commits ensure that the acquisition of E-Plus will not harm competition in the German telecoms markets. Consumers will continue to enjoy the benefits of a competitive market."

It was on October 31, 2013, that Telefónica notified its proposed acquisition of E-Plus to the Commission.

In a separate press release, Telefonica Deutschland confirmed that it has received the EU Commission's conditional clearance to acquire the E-Plus Group from KPN. It said that the merger clearance is important milestone for the company.

The company also stated that it will continue to focus on its mobile data strategy and confirmed the expected synergies from the transaction of more than 5 billion euros, net present value. It remains confident in closing the acquisition of E-plus during the third- quarter of 2014.

In Madrid, Telefónica shares are currently trading at 12.46 euros, down 1.66 percent, on a volume of 11.39 million shares.