Phone firms told to halve ‘other network’ charges

German mobile phone bills should shrink significantly from the start of December, as the big four providers were told on Friday to halve the amount they charge customers for mobile calls between networks.

Phone firms told to halve 'other network' charges
Photo: DPA

The Federal Network Agency which regulates communications facilities, said it was reducing the amount T-Mobile, Vodafone, E-Plus and Telefonica/O2 could charge for calls between them, from a top price of €3.39 per minute to a maximum of €1.85 per minute. In a year’s time this would be further reduced to €1.79 per minute, a spokesman said.

Jochen Homann, president of the agency, said the spread of smartphones and the accompanying rise in data transmission meant that voice transmission was accounting for a dwindling share of the total cost of mobile phone networks.

Telekom said the decision was difficult to comprehend, and that it would lose €500 million in turnover as a direct result, and this would be bad for future investments.

A Vodafone spokesman said the decision was completely the wrong signal, and would take money from the market which was needed for the expansion of digital infrastructure.

A four-week consultation period now starts, while the European Commission and EU regulatory bodies must also have time to comment.

DPA/DAPD/The Local/hc

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E-Plus and O2 merger set to create phone giant

German mobile phone operator E-Plus has been sold to Spain's Telefonica, to be merged with the O2 brand, creating the biggest operator in Germany, it was announced on Tuesday.

E-Plus and O2 merger set to create phone giant
Photo: DPA

The deal cost €5 billion in cash and a 17.6-percent stake in Telefonica Deutschland.

The sale of E-Plus by Dutch telecom operator KPN should enable it to pay a share dividend in 2014 despite its heavy debts.

Assuming it receives approval from competition authorities, the sale should allow for €5.5 billion in efficiencies on the German mobile communications market, KPN said in a statement.

“KPN will use most of this money to increase its financial flexibility and intends to resume payments of dividends to stockholders for 2014,” the company said.

“KPN has been trying to sell for years and Telefoncia was a natural buyer,” said Nico van Geest of Keijser Capital, noting that the Spanish operator wanted to invest less in recession-hit southern European economies.

“They want to be more in the north, in England, Germany,” Van Geest told AFP.

KPN had been urgently looking to sell its German business as a way to raise cash, but had struggled to do so given a poor investment climate.

KPN was in 2012 the target of a hostile takeover effort by Mexico’s America Movil, owned by tycoon Carlos Slim, which owns 27 percent of KPN, making it the largest shareholder.

Analyst Van Geest said the sale of such a big foreign asset was however “dramatic” for KPN, which is now “becoming a local player.”

“They had an international flavour because of being in other countries, but now it’s becoming a local player, it’s really not taking part in this game anymore,” he said.

The announcement comes as KPN announced a 68-percent fall in net profit for the second quarter of 2013 to €108 million. Sales in the period were off 8.1 percent from the figure a year earlier to €2.93 billion, the company said.

“Conditions remained challenging in the first half of 2013, however we have further strengthened our market positions,” chief executive Eelco Blok said.