Hamburg-based internet access provider Freenet has agreed to buy telecom reseller debitel AG for €1.63bn ($2.54bn).

With over 19 million customers the combined company will become the third largest mobile player on the German market, behind T-Mobile and Vodafone but outstripping E-Plus and O2.

Freenet's supervisory board approved the transaction this weekend, despite opposition from shareholder United Internet.

United Internet, which holds 25 per cent in Freenet with mobile phone company Drillisch, wanted to purchase all of Freenet and then split up the internet access business and the mobile telecoms business. However, Freenet was no longer interested in its own DSL business and wanted to concentrate on mobile telephony. The sale of its broadband and fixed-line segment is expected soon.

Debitel's present owner Permira will receive 32 million shares in Freenet, which itself was formed from a merger of mobilcom and Freenet just over a year ago. The transaction is still subject to anti-trust approval by the German cartel office.

On a cash-free basis, the debitel Group will be acquired with financial liabilities in the amount of €1.135bn.

Debitel also offers services in France, Denmark and in the Netherlands. In the Netherlands debitel recently announced it would have to close 60 of its shops and concentrate on internet sales. ®

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