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European Regulators Approves Merger of German Mobile Networks

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European regulators have conditionally approved a merger between two German mobile networks, KPN's E Plus and Telef nica Deutschland's O2.

The European Commission said that the approval is conditional upon the full implementation of a commitments package submitted by Telefónica. The Commission had concerns that the merger, as initially notified, would have removed two close competitors and important competitive forces from the German mobile telecommunications market and that it would have further weakened the position of MVNOs and Service Providers to the detriment of consumers.

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

The merger will bring together the third and the fourth largest mobile network operators  in Germany and would lead to a market structure with three mobile networks of a similar size.

To secure the merger approval, the merged company will offer up to 30 percent of their total network capacity to up to three new MVNOs for fixed fees.

Those MVNOs will also be later granted rights to buy spectrum assets from the merged network which could later see them emerge as stand alone mobile networks in their own right.

The merger between the two networks was announced last October, and will see indebted KPN receive a cash payment of EUR 5 billion and a 20.5% stake in the enlarged company.

KPN said that the deal will leave it with a strong credit profile, and the sale will allow KPN to focus on The Netherlands and Belgium.

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Tags: o2  telefonica  kpn  e-plus  Germany