MADRID, Spain-Wireless operator Telefonica SA received conditional approval of its $31 billion takeover of U.K. operator O2 plc from the European Commission.
However, Telefonica had to agree that one of its subsidiaries, Telefonica Moviles S.A., will leave the FreeMove alliance of European wireless operators and cannot rejoin without the commission’s permission. The FreeMove alliance is a partnership among several international operators, including T-Mobile International, Orange and Movistar, to provide international roaming services across Europe.
Following the announcement, ratings agencies Standard & Poor’s and Fitch cut Telefonica’s corporate credit rating. Both agencies rated the outlook for Telefonica as stable; Standard & Poor’s cited integration risks for O2 and higher debt levels for Telefonica as concerns.
