KPN's Gift to European Telecoms

KPN may have the key to a turnaround in Europe's troubled telecom sector.

The Dutch operator agreed to sell its German wireless carrier E-Plus to Telefónica Deutschland for €8.1 billion ($10.7 billion) in a cash-and-stock transaction. If approved, the deal could signal a more pragmatic approach from Brussels. So far European authorities have resisted in-country consolidation, arguing fewer operators would lessen competition. But mergers also could help the case for badly needed investment, which is another European priority. Even if Brussels permits four operators to become three in Germany, it may levy substantial remedies, cutting into the deal's benefits.