UPDATE: KPN approves E-Plus deal with Telefónica Deutschland

UPDATE: KPN approves E-Plus deal with Telefónica Deutschland

Dutch telecoms group KPN has agreed to sell its German subsidiary, E-Plus, to Telefónica Deutschland for a total of €8.1 billion.

The two companies were yesterday rumoured to be advancing discussions, and the approved deal will now create the biggest mobile operator in Germany, in terms of subscribers, overtaking T-Mobile and Vodafone with a combined market share of 38%.

Telefónica Deutschland will reportedly pay €5 billion in cash for E-Plus, as well as €3.1 billion for a 65% stake in the combined group.

KPN will take a 17.6% stake in the combined company, and Eelco Blok, chief executive of the Dutch operator, told reporters: “The opportunity to unlock significant value in Germany by selling E-Plus is clear and compelling.”

KPN will reportedly use most of the proceeds to address it debt and aims to restart dividend payments in 2014.

The deal follows Vodafone’s acquisition of Kabel Deutschland last month, and further highlights Germany as a key European telecoms market.

The agreement is still subject to approval by KPN shareholders and regulators.