Dutch telco KPN reportedly intends to send out IMs to potential buyers of its Belgian mobile unit, BASE, in about a fortnight – about the same time as the acceptance period for America Movil’s (AMX’s) €8 (US$9.95) per share offer for 27.7% of…
Dutch telco KPN reportedly intends to send out IMs to potential buyers of its Belgian mobile unit, BASE, in about a fortnight – about the same time as the acceptance period for America Movil’s (AMX’s) €8 (US$9.95) per share offer for 27.7% of KPN closes.
Documentation will be send to several companies, including Belgian cableco Telenet and private equity firms, Reuters reported, citing four unidentified people familiar with the matter.
However, a European telecoms banker said, speaking to TelecomFinance, that it might be difficult for private equity bidders to match offers from strategic buyers.
Comparing the asset to Orange Switzerland, the unit that was sold to UK PE firm Apax Partners for €1.6bn late last year, he warned that BASE was already very well managed and achieved high margins. “Orange Switzerland was perfect for PE: A great asset but not the best managed one. Private equity can go in and improve margins by 5,6, or even 10%,” he said.
BASE, with margins in the mid-30ies already, was more difficult to improve further, he argued, giving potential strategic buyer, such as Telenet, an advantage. “If Telenet is serious, it will be difficult for PE to match it,” he concluded.
The Amsterdam-listed telco hopes BASE – Belgium’s third-largest mobile operator – will command a price of €1.6bn to €1.8bn, equal to 5.5x to 6.5x its 2012 EBITDA, Reuters said.
As previously reported, KPN is doing its best to dissuade shareholders from accepting the offer from Carlos Slim’s Mexico-based telecoms group, formally launched on 30 May. The acceptance period closes on 27 June, although AMX has said this may be extended. On 1 June, KPN issued a statement saying its management and supervisory boards believe the offer does not reflect the full value of the company and are therefore exploring “all strategic options to unlock superior value for all shareholders”.
KPN said in mid-April it was considering “strategic options” for BASE. In late May a report claimed Brussels-based Telenet was in talks with private equity firms about potentially submitting a joint bid for BASE. PE firms mentioned at the time included Bain, Blackstone, Cinven, Providence and KKR. Telenet, in which Liberty Global has a controlling stake, has reportedly mandated Lazard and Goldman Sachs to advise it on the potential transaction.
A recent Bernstein report speculated KPN may attempt to sell assets now so it is more expensive and less attractive to AMX. Estimating BASE is worth €1.4bn to €1.8bn, Bernstein said BASE would be a good structural fit for Telenet, which has a mobile licence in Belgium but lacks wireless network infrastructure. Such a merger could also help pave the way for an eventual combination with Belgacom, the report stated, although it added this is unlikely to happen before AMX’ planned tender.
However, Bernstein said the parties could commence formal talks, thereby “muddying the waters and potentially complicating AMX’ bid”.
