Telefónica Deutschland national roaming offer in line with merger remedies, EU Commission confirms

Telefónica Deutschland welcomes the EU Commission’s confirmation that the national roaming offer submitted to 1 & 1 Drillisch is competitive and in good faith.

The offer thus complies with the “MNO remedy” under the antitrust rules from the merger of Telefónica Deutschland and E-Plus in 2014, which include the option of converting the existing MBA MVNO agreement into a national roaming agreement.

Drillisch Online GmbH, a wholly-owned subsidiary of 1&1 Drillisch AG and indirect subsidiary of United Internet, and Telefónica Germany GmbH & Co. OHG (″Telefónica”) have long been in negotiations regarding the conclusion of a national roaming agreement based on the commitments of Telefónica under the merger clearance decision of the EU Commission regarding the merger with E-Plus. The EU Commission supervises the compliance of Telefónica with these commitments.

In October 2020, Telefónica made a, from Telefónica’s perspective, final offer to 1&1 Drillisch on key framework conditions and prices for national roaming. The prices offered shall also apply retroactively from July 2020 to the current MBA MVNO agreement. While Telefónica has been charging consistently high advance service prices under the MBA MVNO agreement since July 2020, Telefónica’s offer is based on the price mechanisms of the first five years of the MBA MVNO agreement. In particular, it provides for annually decreasing data prices that were lower than the prices currently charged under the MBA MVNO agreement.

After completion of its analysis, the EU Commission today communicated to 1&1 Drillisch its assessment that the offer submitted by Telefónica in October 2020 was not fully in line with Telefónica’s commitments under the EU merger clearance decision and that the offer has to be improved by Telefónica. Thereupon, Telefónica today made an improved offer to 1&1 Drillisch. The improved offer can be accepted by 1&1 Drillisch until 19 February 2021.

1&1 Drillisch will examine whether it is in the interest of the company to accept Telefónica’s new offer. Should 1&1 Drillisch decide to accept the offer, the framework conditions and prices offered by Telefónica would then have to be transferred into a national roaming agreement and the application of the new, annually decreasing prices also on MBA MVNO services would have to be regulated with retroactive effect for the period as of July 2020 from the beginning of national roaming.

The conclusion of an agreement, which Telefónica’s offer expects until approx. mid of May 2021, would have a positive earnings effect of approx. EUR 30 million for 1&1 Drillisch and thus also for United Internet in the fiscal year 2020, which would be booked as an out-of-period return in the fiscal year 2021. In addition, an agreement on national roaming would constitute an essential prerequisite for 1&1 Drillisch’s envisaged rollout of a high-performance 5G network.

The EU Commission’s assessment, which has now been communicated, has no significance for the price adjustment procedures initiated by 1&1 Drillisch under the MBA MVNO agreement. In these procedures, 1&1 Drillisch demands from Telefónica significant retroactive reductions of the advance service prices under the MBA MVNO agreement.

In line with the EU Commission, Telefónica Deutschland‘s final offer is valid until 19 February 2021.

 

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