Exclusive: EU set to investigate Deutsche Telekom, Tele2's Dutch deal - sources

By Foo Yun Chee and Olof Swahnberg

BRUSSELS/STOCKHOLM (Reuters) - Deutsche Telekom is set to face a four-month investigation by EU antitrust regulators into its bid to buy the Dutch business of Swedish peer Tele2, two people familiar with the matter said on Tuesday.

The move by the European Commission underscores its hard line against telecoms deals in markets where the number of players would be reduced from four to three and there are fears of consumers being hit with higher bills.

Stiff opposition from the EU competition enforcer scuppered a plan by TeliaSonera and Telenor to merge their businesses in Denmark in 2015.

A year later, it blocked CK Hutchison Holdings' bid to merge its Three UK subsidiary with Telefonica's O2 UK, but then allowed Hutchison to combine its Italian mobile network unit with that of Vimpelcom after securing hefty concessions.

Telecoms operators have urged the Commission to take a broader view of the industry and not focus only on the number of telecoms operators in a market, while regulators say a softer line may be justified by cross-border mergers.

Deutsche Telekom wants to buy Tele2's Dutch assets and combine them with its T-Mobile Nederland, enabling it to better compete with local rivals KPN and Ziggo. T-Mobile Nederland and Tele2 are the third and fourth biggest players in the Netherlands, a market dominated by KPN and Ziggo.

KPN had a 43 percent share of the Dutch market at the end of 2017, Ziggo 30.5 percent and T-Mobile Nederland 21 percent, while Tele2's share was negligible.

The Commission, whose preliminary review of the deal is scheduled to finish on June 12, declined to comment. Tele2 said it was waiting for the EU announcement, while T-Mobile Nederland did not respond to a request for comment.

(Reporting by Foo Yun Chee in Brussels and Olof Swahnberg in Stockholm, additional reporting by Toby Sterling in Amsterdam and Nadine Schimroszik in Berlin; Editing by Robert-Jan Bartunek and Mark Potter)