Telefonica closed the acquisition of smaller rival E-Plus in Germany, following what it described in a statement as “a decisive period” in its recent history with major initiatives in Germany and other leading markets.

The deal closes having received the blessing of the European Commission, thanks to concessions made by Telefonica and KPN, E-Plus’ owner.

Telefonica Deutschland has also completed the capital increase necessary to fund the takeover.

Under the terms of the deal, KPN sold and transferred 100 per cent of E-Plus to Telefonica Deutschland for which it receives €5 billion on a cash and debt-free basis, as well as a 20.5 per cent stake in Telefonica Deutschland.

The deal was first announced on 23 July last year and then amended on 26 August 2013. It is seen as a benchmark for possible, future consolidation in the European mobile industry.

Interestingly, existing E-Plus CEO Thorsten Dirks will stay in the top post. He has stepped down from KPN’s management board and taken over as CEO of Telefonica Deutschland.

However, Telefonica’s Markus Haas takes on the COO post and Rachel Empey, also from the Spanish operator, is the new CFO.

In a statement, Telefonica placed the E-Plus deal in a wider context: “Moreover, this operation follows a decisive period for Telefonica, marked by a series of initiatives which have brought about a profund strategic transformation of the company on its path to become the Leading Digital Telco.”

Aside from the Germany deal, the operator highlighted the acquisition of Brazil’s GVT and “the commercial revolution which has transformed the Spanish market” as defining moments.

The result is that Telefonica has now gained a leading position in three of its most important markets: Germany, Brazil and Spain, the statement said.

Telefonica Deutschland is now the leading operator in Germany “with over 41 million mobile accesses”, it said.

And at a group level, Telefonica is now the second largest operator in Europe in terms of mobile accesses and total revenue.

In addition, Telefonica said the German deal is expected to generate synergies of over €5 billion, particularly from distribution, customer service and mobile network integration.

For its part, KPN will use the majority of the proceeds to increase its financial flexibility, so it can move ahead with its strategy in the Netherlands and Belgium.

Last year, KPN reached agreement with the Dutch tax authorities related to a tax book loss which will be recognised as a result of the sale of E-Plus.

The total tax book loss amounts to approximately €4.8 billion as per 30 September 2014. This is expected to offset KPN’s taxable income in The Netherlands in the coming years, starting in 2014.