DUTCH TELECOM operator KPN called off the sale of its Belgian mobile business Base, which it had hoped would raise up to €1.8 billion, saying offers were too low.
The failure of the auction, which had drawn five non-binding bids from private equity groups, a Belgian cable operator and a media group, means KPN faces tough choices on how to cut its debt and find money for network investment in its home market.
KPN ruled out a rights issue and any further cuts in its dividend after a sharp reduction last month, a company spokesman said.
When Carlos Slim’s America Movil became KPN’s largest shareholder in June, it signalled a preference for the Dutch operator to hold on to its operations in Germany and Belgium.
It was not immediately clear whether America Movil had weighed in to stop the sale of Base, the smallest of Belgium’s three main operators behind Belgacom and Mobistar.
But the investment in KPN and purchase of 23 per cent of Telekom Austria in June show how Carlos Slim, who became the world’s richest man via his Latin American telecoms empire, is making a big bet on Europe despite the region’s debt crisis and weak economy.
The Base sale was intended to buy KPN time for cutting its debt while trying to turn around its business in the Netherlands, where it has been losing mobile clients and struggling with tough competition from cable companies.
Analysts estimate that KPN also needs roughly €500 million to bid in an upcoming auction of fourth-generation mobile licences in the Netherlands.
Sources say during the sale process there was a gap between what bidders were offering and KPN’s price expectations. KPN was seeking roughly 5.8 to six times earnings before interest, tax, depreciation and amortisation, implying a price of €1.6 million-€1.7 billion.
One person close to the talks said a “fair” price would have been €1.4 billion-€1.5 billion, while a second source said first-round bids were far below six times Ebitda.
Belgium’s media group De Persgroep, cable company Telenet and private equity firms Blackstone, Providence and Cinven all submitted non-binding bids last week, people familiar with the process said. – (Bloomberg)
