KPN, the Dutch telecoms operator, will on Monday unveil measures to reduce its €22 billion debt burden by announcing that it intends to sell or reduce its interest in 27 "noncore" operations.
The sell-off will include its 21 per cent stake in Eircom, worth up to €1.5 billion. Eircom apart, the company will target telecom and network assets outside western Europe and its property portfolio. "This will make a substantial difference to our debt level," it said.
While the pace of KPN divestments is expected to be slow, the group's hopes for a clean exit from Eircom were heightened yesterday when telecoms regulator Ms Etain Doyle approved the sale of Eircell to Britain's Vodafone.
Eircom shares closed up nine cents on €2.43 last night driven by a bounce in Vodafone, which is paying for Eircell with its own paper. Vodafone was up on foot of reports that the European Commission will ask EU Governments to allow telecommunications companies delay third generation licence payments. The British group was up 6p sterling, closing at £2.09.
The Eircell deal was worth €1.56 per Eircom share at last night's closing prices. A shareholder meeting to approve the deal is scheduled for the end of April or early May. Standard & Poor's cut the operator's long-term rating to BBB+ in January in view of its inability to reduce debt with equity market proceeds. KPN will focus on fixed-line in the Netherlands and mobile, Internet, call centre and internet protocol data operations in the Netherlands, Germany and Belgium. Last August, it abandoned plans to establish a presence in central and eastern Europe, announcing it was to sell its stake in Cesky Telecom in the Czech Republic. That could raise €970 million, analysts say. KPN's 16.7 per cent interest in Infonet, an international data network operator, is another potential €500 million sale candidate.
Those divestments, including Eircom, would still leave KPN €5 billion - 6 billion short of the target required to nudge up its credit rating.
KPN, will also announce full-year earnings on Monday.
