T-Mobile Netherlands is buying rival Tele2's Dutch operations in a cash and shares deal worth €190 million.
The telcos said the combined company will build a "sustainable challenger" to KPN and VodafoneZiggo, with annual sales of around €2.0 billion and around 4.3 million contract customers.
The enlarged company will operate as T-Mobile Netherlands but the company said the Tele2 brand will continue to operate across the Netherlands.
In addition to the €190 million payment, Tele2 will also receive a 25 percent stake in the new company. T-Mobile Netherlands will also split its mobile tower and rooftop infrastructure into a separate legal entity but will remain owned by Deutsche Telekom.
If the deal is given the go-ahead by competition authorities, it is expected to be completed in the second half of next year.
Søren Abildgaard, CEO of T-Mobile, said the takeover was a means of offering better quality choice to the Dutch consumer and challenge VodafoneZiggo and KPN. He said: "I would like to congratulate all our customers and all others who are looking for attractive alternatives. This combination means justice for customers. This duo has been getting away with this game for far too long and there was only one victim, namely the customer! No more. No longer.
"We will be able to compete against the duopoly much more efficiently and give all Dutch customers a fair choice. We are never going to stop breaking down barriers and will continue to challenge this industry in the years to come."
Other benefits to T-Mobile Netherlands will be the addition of Tele2's 800MHZ and 2.6GHz licences, access to its NL's fixed line infrastructure and consumers, as well as bolstering its retail store portfolio with Tele2's online presence.
Allison Kirkby, President and CEO of Tele2 AB, said: “This is a fantastic opportunity to speed up development of the Dutch telco market and to spur effective competition to the benefit of the Dutch population. I see this as a logical next step to become part of a stronger number three player that will benefit our customers, our shareholders and our employees”.
According to Deutsche Telekom's most recent set of company results, third quarter sales fell 1.5 percent to €327 million. Underlying Ebitda increased 7.7 percent to €98 million.