AM looking for 28% stake in KPN

8 May 2012

LatAm telecoms giant America Movil (AM, controlled by the Mexican tycoon Carlos Slim, has revealed plans to acquire up to 28% of the Netherlands’ leading carrier by revenues KPN Telecom (or Royal KPN as it is also known). In what would be the Mexican group’s biggest foray into Europe to date, Reuters notes that Slim is considering a deal worth up to USD3.45 billion to up its stake in the Dutch carrier. AM already owns 4.8% of KPN’s stock but has announced plans to table a cash offer worth EUR8 (USD10.4) per share to increase its equity holding to 28%. The offer represents a 23% premium on KPN’s closing share price yesterday. It is understood that AM has notified the Dutch financial regulators about its intentions and that it intends to work ‘constructively’ with KPN’s management on the bid. It aimed to complete its offer by the start of June. AM and KPN have declined to comment on the announcement.

TeleGeography’s GlobalComms Database writes that KPN posted a 51% year-on-year fall in net income to EUR288 million for the three months ended 31 March 2012, down from EUR591 million a year earlier, as weak margins across all its business operations – but particularly in its domestic consumer mobile segment – hit its bottom line. The Group reported that quarterly sales dipped 1.4% to EUR3.19 billion, while core earnings before interest, tax, depreciation and amortisation (EBITDA), fell 13% in the first quarter to EUR1.1 billion, broadly in line with the EUR1.111 billion forecast in a Reuters poll of eight analysts. Nonetheless, KPN noted that the fall in EBITDA was most pronounced in the group’s Netherlands home market, where core profit declined 15%, even though core profit at its international business (including Belgium and Germany) showed a small 1.7% y-o-y rise. In the wake of the announcement KPN said it was looking to accelerate its cost-cutting programme. The telco is facing serious problems in its home market where, as smartphone penetration is reaching almost 50%, the company is finding that many of its customers are switching from traditional KPN services like voice calls and SMS, to internet-based application services such as ‘WhatsApp’, a smartphone messaging service, and Microsoft’s free VoIP service ‘Skype’.

Netherlands, America Movil (AM), KPN