EC Clears Telefonica's E-Plus Purchase

BRUSSELS ( The Deal) -- The European Commission on Wednesday granted conditional approval of Telefonica's 8.6 billion euro ($11.7 billion) purchase of Royal KPN's E-Plus unit after the Spanish buyer agreed to several conditions to allay competition concerns.

Regulators ended their six-month in-depth probe into the deal after the Madrid-based buyer pledged to sell up to 30% of the merged entity's network capacity to between one and three so-called mobile virtual network operators, or MVNOs, before closing the acquisition.

Telefonica also promised to divest radio wave spectrum and other assets, either to one of the MVNOs that buys capacity or to a new mobile operator in Germany, and to offer wholesale 4G services to all interested players.

For Telefonica, the third time was the charm with its remedies package, which finally won over EC antitrust busters -- mainly because of its commitment to secure so-called upfront buyers for its network capacity -- after two earlier incarnations failed to past muster.

The upfront buyers include German cellular reseller Drillisch AG, which will take a 20% capacity chunk, and reportedly also Freenet AG, United Internet AG and Liberty Global plc's Unitymedia Kabel BW.

"The commitments offered by Telefonica ensured that the merger will maintain effective competition although it reduces the number of independent mobile network operators in Germany from four to three," Almunia told journalists in Brussels after the EC decision.

The Spaniard also urged EU governments to remove remaining national barriers to having a true single telecoms market across the 28-nation bloc. "What is needed most of all is to eliminate the remaining national barriers, which mainly relate to national procedures for allocation of spectrum, and the lack of a single European regulatory framework."

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