By TOM FAIRLESS CONNECT
June 6, 2014 9:30 a.m. ET
BRUSSELS—European Union antitrust authorities are close to approving Telefónica SA TEF.MC +0.69% 's €8.6 billion ($11.7 billion) takeover of German rival E-Plus, three people familiar with the matter said Friday.
The deal, which would reduce the number of mobile-phone operators in Germany from four to three, is being keenly watched by investors for signs of how EU antitrust authorities would treat further similar deals in Europe's rapidly consolidating telecom sector.
The EU's antitrust division, led by Joaquín Almunia, is understood to be comfortable with the remedies put forward by Spain's Telefónica to address antitrust concerns, the people said. A commission spokesman declined to comment.
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Once Mr. Almunia approves a merger, it has to be ratified by the 27 other EU commissioners, which is usually a formality.
These conditions include releasing up to 30% of the combined companies' spectrum for use by three so-called mobile virtual network operators, which offer mobile-phone services but don't own a network.
The commission will require that at least one of these virtual network phone operators signs up to such an agreement as a condition of approving the deal, two of the people said. At least four companies have expressed interest in taking up the offer, one person said.
Mr. Almunia has previously warned that a drop in the number of mobile operators from four to three in any EU country could lead to higher prices for consumers.
But his agency last month approved a similar mobile-phone deal in Ireland—Hong Kong-based conglomerate Hutchison Whampoa's 0013.HK -1.90% €780 million bid for Telefónica's O2 Ireland.