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By Harro Ten Wolde
FRANKFURT, April 1 (Reuters) - The German telecoms networkregulator wants mobile operators Telefonica Deutschland and KPN's E-Plus to give up someradio spectrum to safeguard competition if Telefonica's 8.6billion-euro ($11.9 billion) acquisition of E-Plus gets approvedby the European Commission.
The Bundesnetzagentur said in a planning paper on Tuesdaythat a combination of Germany's third and fourth mobileoperators would hold too much capacity in the longer range 900MHz and higher capacity 1,800 MHz bands, currently licensed tohandle voice calls but now sought after for use in the longerterm for 4G mobile broadband services.
The European Commission as the EU antitrust regulator is still deliberating on the E-Plus deal with a deadline for adecision set for May 14, following concerns for competition inthe largest mobile market in the EU if the number of networkoperators is cut from four to three.
In addition to the proposed German market consolidation theEuropean Commission is also reviewing Hutchison Whampoa's $1 billion deal for its Irish business Three to takeover Telefonica's O2 Ireland.
The regulatory verdicts on both deals are viewed by themobile industry as vitally important in determining whether theCommission is minded to allow further deals that reduce thenumber of network operators in a national market.
In 2012 the European Commission allowed Hutchison to reducethe competition in Austria to three by buying French firmOrange's Austrian unit on condition that the newcombine would help new operators enter the market.
The German network regulator said on Tuesday it was still upto the European Commission to decide on whether the E-Plus dealshould be allowed but it was making contingency plans for futureallocations of spectrum in Germany.
Telefonica Deutschland and E-Plus together would have 63.8percent of the 1,800 MHz spectrum, leaving bigger rivalsDeutsche Telekom and Vodafone with 28.5percent and 7.7 percent respectively.
However, the regulator said there was no need for now toreallocate the 800 MHz, 2 GHz and 2.6 GHz frequencies, currentlyreserved for the use of mobile data.
"The procedure to make available frequencies in the900/1,800 MHz and others should be opened in the year 2014," the Bundesnetzagentur said in a document published on its website.
An auction of frequencies is now planned for December thisyear but a spokesman for the regulator said it could bepostponed until 2015 and could be combined with the re-resale oflicences for more 900 MHz and 1,800 MHz spectrum which are dueto expire in 2016.
An auction would be the best way to give new entrants achance, the regulator said in the document.
Last year Austria raised 2.01 billion euros ($2.8 billion)in an auction of spectrum for 4G mobile broadband services whichwas among the costliest in Europe to date and totalled almostfour times the amount targeted.
Netherlands raised 3.8 billion euros in a similar auction atthe end of 2012, with the costs causing KPN to cancel itsdividend.
Rival German telecom operators can give their opinion on theBundesnetzagentur's recommendations over the E-Plus deal upuntil April 11, with a final decision planned for June at thelatest, the regulator said. ($1=0.7256 euros) (Editing by Greg Mahlich)
Vodafone (VOD)