Dutch telco KPN has agreed to sell Belgian mobile business BASE to Liberty Global-owned cableco Telenet for €1.325bn in cash. This is Liberty’s first mobile acquisition in Europe, having so far relied on an MVNO model.
JPMorgan advised KPN, while…
Dutch telco KPN has agreed to sell Belgian mobile business BASE to Liberty Global-owned cableco Telenet for €1.325bn in cash. This is Liberty’s first mobile acquisition in Europe, having so far relied on an MVNO model.
JPMorgan advised KPN, while Goldman Sachs worked on the Liberty side.
Telenet has agreed to pay a €100m break fee, in the event that merger control authorities do not approve the deal.
Announcing the deal today, KPN said the valuation represented 8.9x 2014 EBITDA.
The transaction, which gives Telenet a converged presence, will enable KPN to focus on its domestic strategy. The Dutch group, 21.4% owned by America Movil, owns a 20.5% stake in Telefonica Deutschland following the sale of EPlus to the Spanish giant in 2014.
Given the right opportunity, KPN is open to selling that stake, CEO Eelco Blok has said.
KPN said today that it would announce how it planned to spend the proceeds once the deal has completed.
Liberty Global CEO Mike Fries stated, “We fully support Telenet’s acquisition of Base, which represents a cost-effective and unique opportunity to expand Telenet’s mobile and fixed business in Belgium. Not surprisingly, the synergies are substantial and the price at 4.2x OCF is highly accretive to shareholders. Given Telenet’s scale in Belgium, it can absorb the smaller Base business quickly and efficiently. Elsewhere in Europe we will continue to focus primarily on our existing MVNO arrangements and rapidly developing WiFi networks to provide seamless mobile voice and data services to our customers.”
Telenet said it expects to spend some €240m over the next few years to upgrade the capacity and quality of BASE’s network and support systems, and integrate it with Telenet.
KPN CEO Eelco Blok said: “This transaction not only shows our commitment to realize an attractive return for our shareholders, but also positively contributes to BASE Company’s market positioning”, adding that his company was on track to deliver a “stabilized adjusted EBITDA by end-2015, a growing free cash flow and a growing dividend.”
The country’s number three cellco behind Belgacom and Orange-owned Mobistar, Base had 3.3 million customers as of the end of 2014, with a market share of around 21% and an adjusted revenue of €690m.
