Telefónica buys E-Plus to create Germany’s largest operator

Telefónica has bought KPN’s German subsidiary E-Plus – in a deal worth €5 billion ($6.6 billion) to create Germany’s largest operator.

The Spanish firm – who already has a hand in the German market – will take up a 65 percent majority stake in the company. The combination of the company’s current customer base with KPN’s will mean a cumulative base of 43 million customers; controlling 40 percent of Germany’s users.

Currently, the market leaders – Deutsche Telekom and Vodafone – hold approximately 35.3 percent and 29.9% of the overall market share respectively.

This means Telefónica will become the biggest mobile operator in Germany and the second largest in Europe (by number of mobile clients and revenue.)

Occurring in two phases; the first will result in Telefónica Deutschland acquiring 100% of E-Plus for €3.7 billion in cash, and a stake of 24.9% in the combined entity.

In the second, Telefónica S.A. will acquire from KPN a stake of 7.3% in the combined entity for a total of 1.3 billion. As a result, Telefónica SA and KPN will hold 65% and 17.6% of Telefónica Deutschland, respectively, whilst the remaining percentage will be free float.

As part of the Press Release, Telefónica states: “This announcement follows a decisive year in Telefónica’s transformation process, fostered by a series of initiatives that have allowed a significant strategic shift in the company.”

Part of this strategic shift was undoubtedly the appointment of Peter Rampling in April; who is now the Managing Director at Telefónica Digital Germany. Under his management, O2 – a Telefónica subsidiary – won the award for “best digital brand” in the country.

“In Peter Rampling we are gaining a manager with excellent knowledge of the market,” Michael Duncan, CEO of Telefónica Digital Europe, said at the time. Fast-forward three months into his appointment and the company is now the market leader in Germany.

What do you think about Telefónica’s acquisition of E-Plus, and resulting new market leadership?

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