Telefonica says it has secured America Movil’s support to make an improved offer for E-Plus, KPN’s Dutch subsidiary, valuing the operator at €8.55 billion ($11.43 billion) compared with the €8.1 billion in its original offer.
The revised bid would see the Spanish operator pay KPN (The Hague, Netherlands) €5 billion in cash for a 62.1% stake in E-Plus instead of the 65% it had previously sought.
The support of America Movil (Mexico City, Mexico), which owns about 30% of KPN, means the deal has a much greater chance of succeeding, although Telefonica (Madrid, Spain) still needs to win the support of regulatory authorities.
German officials are likely to force the combined company to relinquish some of its spectrum holdings as a condition of the merger, with Rene Obermann, the chief executive of Deutsche Telekom (Bonn, Germany) – Germany’s biggest mobile operator – saying the spectrum situation in German would look “asymmetrical” as a result of the transaction.
Indeed, the vast 1800MHz holdings of Telefonica and E-Plus would appear to give the merger a considerable advantage in Germany’s 4G market, where operators have been refarming 1800MHz airwaves (originally provided for use with 2G services) to support their 4G ambitions.
A combined Telefonica and E-Plus would be Germany’s largest mobile network operator in terms of customer numbers but the smallest of the main players when it comes to service revenues.
Both operators have cast themselves as low-cost alternatives to Deutsche Telekom and Vodafone (Dusseldorf, Germany), the dominant players, but price-based competition is likely to ease if a merger goes ahead.
In an earlier statement, Telefonica said it expected to be able to compete more aggressively on service quality, following the merger, and would have a more extensive distribution network than its competitors.
In the meantime, America Movil looks set to continue efforts to acquire all of KPN, having recently announced a €7.2 billion bid to acquire the remaining shares in the Dutch incumbent.
The deal has already stoked controversy in the Netherlands, with an independent Dutch foundation – a feature of the country’s market – expressing concern about a KPN takeover by the Latin American telecoms giant.