Rumbles of consolidation in the European wireless markets turned into reality this morning over in Germany. Spanish-based Telefónica has apparently agreed to purchase E-Plus from the Dutch incumbent KPN, shaking up the balance of power in the most important market in Europe.
They will be combining E-Plus with their own O2 Germany subsidiary. That will merge #3 and #4 players in the market creating a more viable challenger to the current German market leaders T-Mobile and Vodafone. Combined they will have 43M customers and a 30% market share.
Telefonica will be spending €5B on the deal. €3.7B will be for KPN itself, while the remaining €1.3B will go toward buying a 7.3% stake in Telefonica Deutschland that KPN had owned. They’ll be looking to save as much as €5-5.5B in synergies net of integration costs when all is said and done.
KPN had been looking for a buyer for E-Plus for some time. KPN will still have a foot in the door with a 17.6% share of Telefonica Deutschland after Telefonica pays for the deal via a rights issue sale of stock to existing shareholders. Telefonica will own a controlling 65% stake of course.
Meanwhile, elsewhere in the sector Vodafone says it would consider a Verizon offer to buy out its stake in Verizon Wireless. No big shocker there, of course they’d consider it – the question is and always has been price. And on that front there is still no more news than there has been all year.
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Categories: Mergers and Acquisitions · Wireless
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