The European telecoms index <.SXKP> spiked higher, with Tele2 shares jumping 9 percent for its best day in more than four months. Deutsche Telekom shares recovered from negative territory to a 1 percent gain.

The telecoms industry has long called on the European Commission to take a broader view of mergers aimed at boosting revenue and investment, as well as allowing it to compete better against internet rivals.

Pessimism reigned, however, after Competition Commissioner Margrethe Vestager scuppered a plan by Telia Company and Telenor to merge their businesses in Denmark in 2015.

A year later she blocked CK Hutchison Holdings' plan to merge its Three UK subsidiary with Telefonica O2 UK and also demanded hefty concessions for waving through other mobile telecoms deals.

The Commission opened a full-scale investigation into the Deutsche Telekom bid five months ago, concerned that a deal reducing the Dutch market to three players from four would hurt competition and lead to price increases for consumers.

Deutsche Telekom has argued that the combined company would have only a 25 percent market share, way behind market leader KPN and No. 2 player VodafoneZiggo.

It said the merged third player would be able to challenge the two competitors in fixed-broadband prices in the Netherlands and also roll out a 5G network more quickly.

Under the deal, Tele2 will receive 190 million euros (168.31 million pounds) in cash and a 25 percent stake in the enlarged T-Mobile NL, the two companies said when the deal was announced last December.

The Commission, which is scheduled to rule on the deal by Nov. 30, and Deutsche Telekom declined to comment.

Telecoms consultant John Strand welcomed the prospect of the EU approval, saying its previous stance on the sector was flawed.

"Our research has revealed the folly of regulators rejecting 'four-to-three' mergers for reasons of competition and price only to find that their logic was wrong and that prices increased," he said.

The EU green light could be a watershed moment for European telecoms and speed consolidation in Spain and the UK while boosting valuations for some companies, Bernstein analyst Dhananjay Mirchandani wrote in a client note.

(Reporting by Foo Yun Chee, additional reporting by Doug Busvine in Frankfurt and Olof Swahnberg in Stockholm; Editing by Keith Weir and David Goodman)

By Foo Yun Chee