Telefonica has won EU antitrust clearance for its €8.6bn takeover of E-Plus, marking a milestone in telecoms consolidation.
The Spanish group is in fierce competition with Vodafone and Deutsche Telekom's T-Mobile in the German market, but combining the German arms of KPN and Telefonica will create the country's largest mobile operator by customers.
The EU Commission insisted that Telefonica sold up to 30 percent of the merged company's network capacity and that it would also divest radio wave spectrum to allow for up to three new ‘virtual’ operators, as the takeover will bring down the number of German mobile network operators from four to three.
Virtual operators rent access to bigger rival networks, and tend to sell cheaper mobile plans, to enter the German market, where consumers already pay among the highest mobile prices in Europe.
"The remedies to which Telefonica commits ensure that the acquisition of E-Plus will not harm competition in the German telecoms markets," European Competition Commissioner Joaquin Almunia said in a statement.
All major deals must go to the European Commission for approval. It acts as a competition watchdog in the 28-member bloc and has said in the past that it would not stand for duopolies or monopolies in any country.
But today’s ruling by the EU’s powerful antitrust chief Almunia should encourage telecommunication groups lobbying for lighter regulation of mergers to allow them to bulk up after years of falling revenue.
Squeezed by a fifth year of falling revenues, thanks to tighter regulation, and facing demands to invest in faster networks, European telecoms groups are increasingly turning to consolidation.