Telefonica has offered some spectrum and roaming concessions to the European Commission (EC) in a bid to clinch approval for its proposed €8.6 billion takeover of KPN’s E-Plus in Germany, according to a confidential document seen by the Financial Times (FT).
“We have presented the commission with a proposed set of remedies we believe strongly foster competition and address all concerns relating to competitiveness in the market,” a Telefonica Germany spokesperson told Mobile World Live via email.
According to FT’s reading of the confidential document, however, the concessions look modest.
While both the EC and Germany’s telecoms regulator reportedly want Telefonica and E-Plus to give up spectrum at 900MHz and 1.8GHz as condition for any merger approval, it appears the Spanish giant is only willing to give ground at the higher frequency band.
Telefonica has pledged to lease a 40MHz chunk of higher wireless frequencies, says the FT – presumably at 1.8GHz – covering up to 50 per cent of the population in urban areas. No concessions, it seems, were made on 900MHz.
The FT report says the 40MHz concession represents only around a seventh of the spectrum holdings of a combined Telefonica Germany and E-Plus.
Telefonica is also offering a roaming agreement – on commercial terms – so rivals can access the rest of the country over the merged entity’s network.
However, there are conditions attached. Telefonica has apparently placed a cap on roaming agreements so they don’t chew up more than 10 per cent of network capacity. Moreover, if no-one takes up the roaming offer by the end of this year, Telefonica – according to FT’s reporting of the document – will take it off the table.
As part of the anti-trust approval process, the commission has circlulated Telefonica’s concessions to rivals for feedback as part of the “market test”.
“We cannot comment on any speculation and details as the filing of remedies and the related market test are non-public parts of the merger clearance process,” added the Telefonica Germany spokesperson. “We remain confident regulatory approval by the EC with non-deal blocking remedies will be given in Q2 and as such expect to close the transaction in mid-2014.”
Germany, along with Ireland, are seen as important test cases for the commission on its willingness to reduce the number of mobile network operators in EU member states.
Hutchison’s 3 Ireland has also submitted a number of potential “remedies” to try and allay anti-trust concerns about its bid for Telefonica’s Irish unit.
They are believed to include the setting up of a new MVNO, which would later be able to buy some of the merged company’s radio spectrum and customer base.
The EC said it would decide on Telefonica’s bid for E-Plus by 23 June.