The Federal Network Agency of Germany has begun analyzing the merger between two leading mobile operators in the country, E-Plus, a subsidiary of KPN and Telefonica Deutschland, which operates as O2 in Germany. Thus, among other conditions, the regulatory authority is studying the possibility of requiring E-Plus and O2 to return some of the frequencies which have to pass the transaction.
As reported yesterday by the German newspaper Frankfurter Allgemeine Zeitung (FAZ), the German regulator believes that GSM and UMTS licenses are linked to their competitive independence.
The paper indicates that the Federal Network Agency of Germany has already sent letters to Thorsten Dirks, CEO of E-Plus, and Rene Schuster, CEO of Telefonica Germany, which warned if there is a merger between the two companies, there would be a massive imbalance in the frequencies above 1000 MHz.
According to the FAZ report, in a similar case, it is also went that way. When the German Telekom in the UK put together its mobile business with France Telecom, British authorities revoked part of the spectrum in order to auction off to the competitors.
An E-Plus spokesman on Monday confirmed receipt of the letter, stressing that the company is in discussion with government officials but didn’t comment further. In any case, the operation must receive the approval of both the competition authorities of Germany and the European Commission itself.
The combined company will result in the creation of a mobile operator with over 43 million customers in the Teutonic country. Since comparatively scarce supplies, the German Telekom and Vodafone could therefore fall behind in the medium term. The GSM frequencies only play a minor role, as these will expire by end of 2016 in any case and have to be reassigned.
A Vodafone spokesman said on Monday that a merger between E-Plus and O2 would distort competition because of the amount of spectrum above 1,000 megahertz that would be owned by the joint E-Plus-O2 company but didn’t want to comment further. A spokesman at Deutsche Telekom echoed his remarks.
The more megahertz, the weaker the signal, which means that more base stations are needed. However, higher frequencies can also transport higher data speeds, so they are particularly useful to set up fast LTE-networks in urban areas.
Source: Frankfurter Allgemeine Zeitung