Just days after Telenet’s decision not to further participate in the Base sales process, Dutch telco KPN has today called off the sale of its Belgian mobile unit. KPN said the non-binding offers received are “unsatisfactory” and reflect the difficult…
Just days after Telenet’s decision not to further participate in the Base sales process, Dutch telco KPN has today called off the sale of its Belgian mobile unit. KPN said the non-binding offers received are “unsatisfactory” and reflect the difficult financial market conditions.
“The non-binding offers did not take the strong position and outlook of Base into account,” KPN said in a statement today. “Base has a successful challenger strategy with strong revenue growth, attractive margins and excellent momentum for continued upside.”
Base was expected to sell for about €1.6bn to €1.8bn. Belgian cableco Telenet, Belgian media group De Persgroep and private equity firms Blackstone, Providence and Cinven reportedly submitted non-binding bids by the end of July deadline. However, Telenet said just days ago publicly that it was not planning any significant acquisitions in the foreseeable future, effectively ruling itself out as a buyer.
BernsteinResearch analysts recently speculated that failing to sell Base “would complete AMX’s [America Movil’s] apparent attempt to convince the company to stop sacrificing long-term shareholder value for short-term shareholder remuneration”.
In a report today, Bernstein suggested that following the failed sale attempt a network sharing transaction with Telefonica in Germany was now more likely “in order to create savings to help manage their high debt load.”
The analysts also said KPN’s rebased dividend is likely to come under increasing pressure. Estimating the telco will generate about €1.6bn of free cash flow in 2013 – of which about €500m will be needed for upcoming spectrum auctions and about €500m to reduce leverage to below 2.5x – the analysts said the actual dividend cover is closer to 1.0x and could fall further.
KPN, which launched the sale process for Base in July, today said it remains “committed to maintaining a prudent financial framework and creating value for all shareholders”.
CEO Eelco Blok recently warned the sale could be called off if the company deemed offers unsatisfactory.
