Telefónica Germany eyes network sharing deal with E-Plus

Telefónica Germany eyes network sharing deal with E-Plus

Telefónica is reportedly considering a network sharing agreement between its German unit and KPN’s E-Plus for cost efficiencies.

The move comes after the two abandoned merger talks earlier this year.

“When people were looking at a potential coming together of Telefónica Deutschland and E-Plus, there was some significant analysis of potential network synergies,” Rachel Empey, CFO of Telefónica Germany told investors on a conference call, according to Bloomberg. “Quite a lot of those synergies might be available through network sharing.”

It is thought any agreement would be similar to the one Telefónica signed with Vodafone in the UK, combining basic network infrastructure but with both operators continuing to run competing services. 

Telefónica Germany said that it was in talks with two out of its three rivals to explore network sharing opportunities and that a deal would likely be reached before early next year.

Such an agreement would likely be favoured by KPN which recently announced a 9% drop in third quarter profits at E-Plusdue to lower consumer spending.

It was also revealed that Telefónica was narrowing the price range of the IPO of its German unit to €5.5 to €6 per share from the €5.25 to €6.5 per share announced previously.

A merger of E-Plus and Telefónica Germany would generate synergies of up to €4 billion, according to a document prepared by one of the banks managing Telefónica’s IPO of its German unit, according to Bloomberg.