July 23 - Dutch telecoms group KPN will sell its German unit to Telefonica Deutschland for some 8.1 billion euros ($11 billion) in cash and shares, in a long-awaited deal that will test regulators' views in Europe's largest mobile market. Hayley Platt reports.
8.1 billion euros is today's daily digit in Europe - the amount Dutch Telecoms group KPN will sell its German unit for. Telefonica Deutschland is paying 5 billion cash for E-Plus in the hope of creating a strong competitor to Deutsche Telecom and Vodafone. It will also give KPN a 17.6 percent stake in the merged company. If approved by regulators and shareholders both companies hope it generate synergy benefits of between 5 and 5 and a half billion euros. Telefonica says the deal will give it 38 percent of Germany's mobile users and almost 32 percent of the market in terms of earnings. But it's shares fell more 5% after the announcement, in contrast to a 3% rise at KPN. Frankfurt trader Fidel Helmer says there's plenty more volatility ahead. (SOUNDBITE) (German) CAPITAL MARKET ANALYST AND TRADER WITH HAUCK&AUFHAEUSER BANK, FIDEL HELMER, SAYING: "I think all mobile communications providers must restructure. They have to save costs. There will be some movement in this market to come. I am also not sure that we will still have three large providers in the future, the market will certainly shrink to one provider." KPN has some 24 million customers in Germany and saw its core profit there decline by almost a third in the second quarter as it lowered prices to attract new customers. It said it would use the majority of the cash proceeds to improve its balance sheet and would restart paying a dividend next year.