Europe: Telefónica shares network with MVNO ahead of E-Plus decision


Ahead of a key regulatory decision over its plan to acquire E-Plus, Telefónica signed a network sharing agreement on June 25 with Drillisch, which operates as a mobile virtual network operator in Germany.

Under the deal, the smaller rival will get access to 20% of Telefónica’s network in the country. The agreement is contingent on European Union regulator’s approval of Telefónica’s $11.7 billion purchase of E-Plus.

On June 23, Telefónica officially signed the documents to acquire the German unit of Dutch telecom KPN. The combined telecom that would result from the deal would have 43 million customers — more than half Germany’s estimated population of 81 million people.

“Both companies have a reputation in Germany as fast-moving innovators that consistently challenge the market with exciting new products and services. This will continue to be the core strategy of the enlarged company,” says René Schuster, CEO Telefónica Deutschland. “Customers will benefit from a comprehensive range of telecommunication services.”

Telefónica’s takeover of E-Plus would also reduce the number of leading carriers in Germany from four to three — the other major carriers being Deutsche Telekom and Vodafone.

The E-Plus acquisition is supposed to close at the end of 2014, but regulatory approval is still uncertain. Conflicting reports emerged in recent weeks: The Financial Times cited unnamed sources saying there was strong opposition among regulators while other sources told Reuters that regulators would approval the deal if Telefónica opened its network to rivals as it has just done with the Drillisch agreement.

A decision from EU antitrust regulators is expected within the next couple of weeks.

More telecom news from Europe:

EE plans to launch VoLTE and VoWi-Fi services in the U.K. EE said it is conducting trials of the two technologies with an eye to launching voice over LTE in early 2015 and voice over Wi-Fi this fall. Analsys Mason forecasts that IP voice services will account for 25.6 billion minutes of voice calls in the U.K. in 2018. The analyst firm believes that by moving to IP voice, which includes both VoLTE and and VoWi-Fi, operators can control costs and compete with over-the-top voice services such as Skype as well as improving the overall voice experience.

Telefónica sells Telecom Italia bonds. Telefonica sold $140 million worth of bonds that can be exchanged for Telecom Italia shares, causing observers to predict the Spanish telecom will eventually exit from the Italian company.

TeliaSonora taps Ciena to upgrade European network. The Stockholm-based telecom, which is one of the two suppliers of global internet backbone services, has selected Ciena’s converged packet optical platform for the pan-European portion of its fiber network.

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About Author

Sara Zaske

Contributor, Europe
Sara Zaske covers European carrier news for RCR Wireless News from Berlin, Germany. She has more than ten years experience in communications. Prior to moving to Germany, she worked as the communications director for the Oregon State University Foundation. She is also a former reporter with the San Francisco Examiner and Independent, where she covered development, transportation and other issues in the City of San Francisco and San Mateo County. Follow her on Twitter @szaske