KPN agrees €1.3B Base sale to Liberty Global subsidiary

KPN agrees €1.3B Base sale to Liberty Global subsidiary

20 APR 2015

Dutch incumbent KPN struck a definitive agreement with Telenet Global Holding, a subsidiary of European cable company Liberty Global, to sell Base, its Belgian mobile unit, for €1.33 billion in cash.

Telenet, a cable operator, also runs an MVNO on capacity purchased from Mobistar (Orange) – Belgium’s second largest mobile network operator – but that only has around 900,000 connections.

By acquiring Base, which, according to GSMA Intelligence, had 3.4 million connections by end-2014, it’s better placed to mount a challenge to market leaders Proximus (Belgacom) and Mobistar, which had 5.1 million and 4.6 million connections respectively by the end of last year.

John Porter, Telenet CEO, on announcing the Base deal, said “we have made a significant step to secure long-term mobile access conditions, ensuring we are well positioned to effectively compete for the future growth opportunity of mobile data”.

Porter also intends to make further pushes on integrated fixed and mobile services.

The Liberty Global subsidiary earlier announced €500 million investment in its HFC (hybrid-fibre coaxial) network, and now intends to spend around €240 million on Base’s mobile network – which includes integration costs – to “complement” its HFC funding.

Telenet intends to finance the Base acquisition through a combination of €1 billion debt and existing liquidity.

KPN focuses on home
By selling up in Belgium, and having already exited the German market through the sale of its E-Plus subsidiary to Telefonica Deutschland, KPN said it would now “fully focus on its successful integrated access strategy in the Netherlands”.

The Dutch incumbent added that it would use sale proceeds “to create maximum value for shareholders”, although it did not elaborate on what this might mean.

KPN said a further announcement on how it will use the money would be made on completion of the transaction.

The Dutch operator emphasised, however, that its shareholders were getting a good deal from the Base sale, which values the mobile operator “attractively” at 8.9 times full-year 2014 EBITDA.

In addition, KPN is eligible for a €100 million break-up fee, payable by Telenet, in the event that anti-trust authorities don’t approve the transaction.

“This transaction not only shows our commitment to realise an attractive return for our shareholders, but also positively contributes to Base company’s market positioning,” said Eelco Blok, KPN CEO.

“We are strong believers in convergence and are delivering very good results with our fixed-mobile product offerings in the Netherlands, with customer base growth and increasing customer satisfaction. Our continued good progress is expected to result in a stabilised adjusted EBITDA by end-2015, a growing free cash flow and a growing dividend,” he added.

One potential loser of the deal, should it go through, is Mobistar, which would no longer receive MVNO fees from Telenet.

Telenet said it expects annual savings of around €150 million as a result of the deal.


Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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