Telefonica considers sale of German business - report

Thursday 8 March 2018 | 13:10 CET | News

Telefonica is in the early stages of considering a sale of its German business, according to a report from German paper Wiwo.de citing sources in the telecom and financial sectors. While no investment bank has been named yet to find a buyer, there is reportedly interest in the market. 

Telefonica declined to comment. The Spanish operator owns 69 percent of the German company, while Dutch operator KPN still has an 8 percent stake from merging E-Plus into Telefonica Deutschland. The rest of the shares are listed on the stock market. In total, the German operator has a market capitalisation of around EUR 11 billion. 

The report suggested that the merger of mobile operators E-Plus and O2 has proven less than successful, with fewer customers, lower revenues and continued losses. Telefonica Deutschland's share price has fallen 20 percent in the past five months. Telefonica has also struggled to gain a foothold in the German fixed market, where rivals Deutsche Telekom and Vodafone are increasingly bundling services with mobile. A sale of the German company could also contribute to Telefonica's debt reduction efforts, after it failed to sell O2 UK due to regulatory opposition. 

The most likely buyer would be Drillisch, the biggest MVNO which recently merged with United Internet. However, Drillisch already benefits from special conditions for access to the Telefonica network, under regulatory conditions imposed on the O2/E-Plus merger. 

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