Telefonica-KPN Review Is Said to Focus on Smaller Operators

The European Commission’s review of the proposed merger of Telefonica SA and Royal KPN NV’s German wireless units focuses on bolstering smaller competitors that lease capacity rather than attracting a new network operator, according to people familiar with the process.

While Telefonica Deutschland Holding AG agreed to hand urban wireless spectrum to a new rival in a bid to win the commission’s assent to the $12 billion deal, regulators aren’t expecting the offer to be taken up, said the people, asking not to be identified because no ruling has been made. The emphasis is on improving conditions to make companies such as United Internet AG and Freenet AG, which lease capacity from network carriers, more competitive, they said.