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Regulator announces KPN to continue wholesale access to its network, acquire 60% of Reggefiber

31 Oct 2014

The Netherlands Authority for Consumers and Markets (ACM) has delivered two-pronged news to Dutch telecoms giant KPN – the company must continue to provide wholesale access to its copper and fibre-optic network for the next three years, and it has the regulator’s approval to acquire a further 9% share in fibre-optic company Reggefiber, of which the Dutch operator already owns a 51% stake. ACM wants to ensure competition in the fixed telecommunication market in order to provide consumers and businesses with choice; once KPN has a 60% ownership of Reggefiber (the transaction is scheduled to take place on 3 November 2014), alongside the recently-approved Ziggo-UPC merger, there will effectively be two major fixed broadband networks for Dutch consumers, the watchdog reasoned in its decision. ACM assures KPN that wholesale access requirements will be adjusted in such a way that the incumbent will be able to modernise its network and compete effectively with Ziggo/UPC, while allowing continued access to its infrastructure for other providers, thereby maintaining competition in the market. Member of the regulatory board, Henk Don, further explains: ‘Thanks to competition on the telecommunication networks, consumers and businesses annually save at least EUR250 million [USD315 million] because prices for telecommunication services remain competitive … KPN and UPC/Ziggo are challenged by their competitors to continue to invest in their networks and to innovate. As a result, faster and better connections become available in the Netherlands.’

Although already owning a majority equity stake in Reggefiber, KPN previously shared management control of the open fibre provider with founding shareholder Reggeborgh, a Dutch private investment company. KPN exercised an option to take full control in January 2014, involving the purchase of 9% of additional equity for EUR161 million, but regulatory approval for the deal took nearly ten months. KPN will fully consolidate Reggefiber into its group financial results from 1 November 2014. Reggeborgh retains an option to sell the remaining 40% in Reggefiber to KPN, exercisable from July 2017 for an 18-month period, for EUR647 million, or alternatively the option can be exercised at fair value until 1 January 2021.

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