Telefonica Expands DTS Offer, as EC Nears E-Plus Verdict

BRUSSELS (The Deal) -- As EU competition regulators meet representatives of EU governments behind closed doors in Brussels Wednesday to discuss Telefonica's  (TEF) 8.55 billion euros ($11.6 billion) bid for Royal KPN's E-Plus carrier in Germany, the Spanish telecoms giant maneuvered to seal a takeover in its home market.

Telefonica announced an offer to buy Mediaset's 22% stake in Spanish pay-TV provider Distribuidora de Television Digita, or DTS, for 295 million euros, though it's not yet certain whether Mediaset will waive a preferential right to buy the 56% DTS stake held by Promotora de Informaciones SA, or Prisa, which has already agreed to sell its DTS stake to Telefonica.

Securing the European Commission's approval for the E-Plus purchase is also not yet a done deal, and representatives from several member states including Germany, the U.K., Austria and Ireland were expected to voice concerns over that deal at Wednesday's meeting. Representatives from Germany's Federal Cartel Office, which had sought to review the case itself, were due to attend.

While so-called advisory committee meetings are largely a formality, they allow all 28 EU governments a final chance to express their views on a Phase 2 case before regulators put the decision to a vote before the European Commission.

The deal would reduce the number of mobile operators in Germany from four to three. Most concerns surround getting the concessions right after Hutchison Whampoa's failure last year to find buyers for radio spectrum in Austria. The spectrum offer was one of the conditions for securing EC approval for its purchase of Orange Austria Telecommunication GmbH from Mid Europa Partners -- another deal which cut the number of country operators from four to three.

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