Telefonica to buy German mobile network E-Plus for €5bn

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Purchase creates largest mobile operator in the country, resulting in a market share of 38 per cent and 43 million customers

Telefonica has agreed to buy German mobile operator E-Plus from its Dutch rival KPN for €5 billion. It would create Germany’s biggest mobile network by market share and customer numbers.

The deal is subject to approval from European antitrust officials, as well as the boards of both companies. It would leave Germany with three mobile operators, alongside T-Mobile Germany and Vodafone Germany, which together own more than half of the market.

KPN has agreed to sell E-Plus for €3.7 billion in cash and will also initially receive a 24.9 per cent stake in the company, Telefonica Deutschland, which owns the combined operator. Telefonica has said it will buy a 7.3 per cent stake in Telefonica Deutschland from KPN for €1.3 billion.

Telefonica will fund the initial €3.7 billion payment by selling new shares of stock to Telefonica Deutschhland to existing shareholders in a rights issue. Telefonica would then hold 65 per cent and KPN 17.6 per cent in Telefonica Deutschland, with the remaining shares widely held.

The completed deal would create Germany’s largest mobile operator with a market share of 38 per cent, 43 million customers and annual revenues of €8 billion.

Telefonica said: “With this agreement, Telefonica will become Europe’s second largest operator by number of mobile clients and volume of revenue and will improve both its growth and cash generation profile.

“Additionally, Telefonica will gain a leading position in the largest and one of the most dynamic mobile markets in Europe. The company will also become the leading operator in terms of number of accesses, network quality and distribution network in three of its main markets: Germany, Brazil and Spain

“Creating a leading, sustainable and innovative digital telco focusing on mobile data and LTE development in Germany is a natural strategic step for Telefonica.”

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