Friday, July 11, 2014

Mergers: Commission clears acquisition of E-Plus by Telefónica Deutschland, subject to conditions

1) First, Telefónica offered a package of commitments aimed at ensuring the short-term entry or expansion of one or several MVNOs which will compete with the merged entity. MVNOs offer mobile telecoms services to consumers through access to the network of MNOs. Telefónica commits to sell, before the acquisition is completed, up to 30% of the merged company's network capacity to one or several (up to three) MVNO(s) in Germany at fixed payments. The capacity is measured in terms of bandwidth and the MVNO entrants will obtain a dedicated "pipe" from the merged entity's network for voice and data traffic. This model is more effective than the typical pay-as-you-go model that MVNOs and Service Providers currently use in Germany - and more generally in Europe - and under which they pay for network access on a per usage basis. The Commission's investigation in this case also showed that the model is viable for the German telecoms market. Indeed, with a fixed capacity that they committed to pay upfront at their disposal, the MVNOs will have increased incentives to fill the capacity they have committed to purchase by offering attractive prices and innovative services.

2) Second, Telefónica commits to offer to divest radio wave spectrum and certain assets either to a new MNO entrant or subsequently to the MVNO(s) who will have taken up the network capacity thanks to the first part of the commitments. These assets, in conjunction with the upcoming frequency auction to be organised by the German telecoms regulator, could facilitate the entry or enable the development of a new MNO into the German market in the future.

3) Third, Telefónica commits to extend existing wholesale agreements with Telefónica's and E-Plus' partners (i.e. MVNOs and Service Providers) and to offer wholesale 4G services to all interested players in the future. In addition, Telefónica commits to improve its wholesale partners' ability to switch their customers from one MNO to another.

read full statement at European Commission 




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