The Dutch government plans to introduce a bill next spring that will require buyers to seek permission from the government for certain deals involving telecoms assets.
Under the new legislation, parties wanting to buy or sell a controlling interest in…
The Dutch government plans to introduce a bill next spring that will require buyers to seek permission from the government for certain deals involving telecoms assets.
Under the new legislation, parties wanting to buy or sell a controlling interest in owners of vital telecoms infrastructure, such as KPN, would need to obtain a ‘declaration of no objection’ from the state.
In a letter to the Dutch parliament, Minister of Economic Affairs Henk Kamp said the law would be designed to safeguard the public interest and in particular national security, noting that the government, businesses and citizens depend upon a well-functioning telecoms network.
It would apply to any party wanting to buy or sell a controlling interest in vital telecoms infrastructure in the Netherlands, defined as networks and services essential to Dutch society and national security.
New controlling shareholders would also require a declaration of no objection to appoint management and supervisory board members. At present, only incumbent telco KPN would fall within the remit of the new framework.
“KPN has a special position with regard to a number of services that are important for the proper functioning of government and for national security,” the letter states.
The government had said in an earlier letter to parliament about Mexican telco America Movil’s (AMX’s) attempted buyout of KPN that a takeover of the telco by “a party exercising undue influence” could jeopardise national security.
KPN acknowledged the plans for the new bill in a statement, saying it understands the intended framework will set out a transparent and predictable approval process for a party wishing to acquire a controlling interest in vital telecoms infrastructure.
“KPN understands that the declarations will under normal circumstances be issued unless the minister has firm grounds to believe there is a risk to national security.”
The telco noted that the government has said the new framework should not interfere with the promotion of foreign investments in the local telecoms sector.
In his letter, Kamp said a similar framework designed to protect national security is already in place in the Dutch financial services sector. Meanwhile, Germany and the UK have structures to assess potential national security risks associated with telecoms takeovers, he added.
The Dutch government is expected to conduct a consultation process on the new framework before making a formal proposal to parliament in spring 2015.
Carlos Slim’s AMX withdrew its €7.2bn takeover bid for KPN last year after the foundation charged with protecting the telco acquired preference shares, effectively blocking the deal.
