Spain’s Telefonica and the Netherland’s KPN are reportedly set to resume talks about network sharing in Germany in an effort to cut costs.
The Spanish telco wants to discuss a merger between the network used by its German unit, known as O2, and…
Spain’s Telefonica and the Netherland’s KPN are reportedly set to resume talks about network sharing in Germany in an effort to cut costs.
The Spanish telco wants to discuss a merger between the network used by its German unit, known as O2, and KPN’s German unit E-Plus, the UK’s Financial Times (FT) reported, citing unidentified sources close to the matter.
Telefonica and KPN declined to comment.
The two telcos discussed a tie-up last summer but failed to reach an agreement. KPN – then trying to fend off America Movil’s ultimately-successful bid for a 27.7% stake in the company – subsequently attributed the failed agreement to adverse market conditions.
KPN went on to sell 2,000 E-Plus towers to American Tower for €393m, while Telefonica floated 23.17% of O2 Deutschland’s shares in an IPO that raised €1.45bn.
Nonetheless, KPN management has continued to say it is open to network sharing in Germany to save costs. In February, CEO Mobile International, Thorsten Dirks, told analysts during a presentation that “the option to form a network sharing deal is always there”. He noted that the company would look at options “in the coming period”.
According to the FT report, the management of the Spanish and Dutch telcos intend to meet to discuss network sharing in Germany in greater detail, although they are unlikely to reach an agreement until after KPN completes its planned rights issue of up to €3bn.
The Dutch telco announced yesterday that its board of directors had approved the issue, expected to take place after the publication of its Q1 2013 results, scheduled for 23 April.
The report cited one of its sources as saying that, while the companies are most likely to reach a deal on network sharing, there is also a possibility that they could decide to merge.
Telefonica, still working to reduce debt, already has network sharing agreements in the UK, Brazil and Mexico and, according to the FT report, is considering network-sharing deals in other markets.
Bernstein Research analysts said in a note to investors that they believe a network sharing agreement in Germany with Telefonica would be positive for KPN, significantly boosting the valuation of its shares.
