Telefonica Offers Concessions to Secure German Merger

                    

Telefonica has offered concessions to the regulators to secure the merger of its German subsidiary with rival mobile network E Plus.

Although German regulators want to oversee the merger proposal, the European Commission has called it in, citing concerns about a reduction in competition in the local market.

The merger between Telefonica O2's majority owned German subsidiary and KPN's E-Plus network would see the local market reduce to three mobile networks.

"We remain confident that we will get merger clearance in the second quarter," spokesman Albert Fetsch told Reuters by telephone.

The German telecoms regulator has also indicated that it will use the merger to claw back some radio spectrum and resell it to the other networks, or potentially a new entrant.

Under the terms of the rmerger, KPN is selling its stake in E-Plus to Telefonica Deutschland for EUR5 billion, and a 20.5% stake in the merged company.

The total implied transaction valuation for E-Plus is EUR 8.55 billion.