Telefónica and E-Plus merger could result in spectrum forfeit

German telecoms regulator the Bundesnetzagentur has warned Spanish operator group Telefónica that its acquisition of KPN’s German subsidiary E-Plus could see the firms relinquish some spectrum.

In October last year KPN’s shareholders approved the sale of E-Plus to Telefónica Deutschland for a bid of €5bn in cash and a 20.5 per cent stake in Telefónica Deutschland post transaction. KPN said the deal will allow it to refocus on its operations in the Netherlands and Belgium.

However, the deal is still subject to regulatory approval and after consulting industry stakeholders, the regulator has voiced concerns regarding the total amount of spectrum the firms would possess.

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E-Plus currently holds 10MHz spectrum in the 900MHz band; 54.8MHz in the 1.8GHz band; 44.6MHz in the 2GHz band, 30MHz in 2.6GHz and 84MHz in the 3.5GHz band. Telefonica also holds a sizeable spectrum portfolio in Germany with 20MHz in the 800MHz band; 10MHz in the 900MHz band; 34.8MHz in 1.8GHz; 48.9MHz in 2GHz and 50MHz in the 2.6GHz spectrum band.

According to the Bundesnetzagentur, the company formed by a Telefonica and E-Plus merger would own 28.8 per cent of the spectrum available in the 900MHz band and 63.8 per cent of spectrum in the 1800MHz band; more than twice as much as Deutsche Telekom owns in the 1800MHz band and more than eight times more than Vodafone’s 7.7 per cent of spectrum holding in the band.

The Bundesnetzagentur confirmed that the two rival operators, Deutsche Telekom and Vodafone, see the combined spectrum holding as discriminatory as it would have been obtained by a merger rather than in a fair and transparent spectrum auction.

The regulator is now seeking further consultation from industry stakeholders until April 11 2014 before a hearing on May 5 2014.