Vodafone eyes KPN Spanish mobile unit

Reuters

Dutch telecom firm KPN (The Hague, Netherlands) has opened the books at its Spanish operations to prospective buyers, including Vodafone (London, England), a person familiar with the situation told Reuters on Tuesday.

KPN's chief executive, Eelco Blok, said in May he would refocus KPN's international mobile division, including expanding Ortel, its mobile phone business which targets immigrants, and would cut inefficient operations outside the Netherlands, Germany and Belgium.

At the time, Blok declined to say whether KPN's Spanish and French units would be divested, but he did say they were being reassessed.

Spanish daily El Economista on Tuesday reported that Vodafone was in talks to buy the Simyo mobile virtual network operator (MVNO) Spanish business from KPN, citing unnamed sources. Simyo is one of KPN's low-budget, pre-paid mobile phone services, which is only obtainable online in the Netherlands, Belgium, Germany and Spain.

Vodafone declined to comment when contacted by Reuters.

KPN spokesman Stefan Simons declined to comment on the media reports, but instead referred Reuters to Blok's statements in the past about KPN's focus on the Netherlands, Germany, Belgium and the firm's Ortel mobile business.  Ortel, available in all the countries where KPN operates, is also a low-cost, pre-paid mobile service.

"A sale of Spain (and France) fits within the strategy to refocus the international mobile activities. But with estimated proceeds of well below 100 million euros [$135 million] it is a relatively insignificant deal for KPN," says SNS Securities (Amsterdam, Netherlands) analyst Victor Bareno.

KPN's businesses in Spain and France have a total of 800,000 mobile customers using pre-paid services. KPN, the largest telecommunications provider in the Netherlands, has struggled to reverse a decline in revenues, profits and market share in its domestic fixed-line and mobile businesses in recent quarters in the face of intense competition.

KPN makes about one third of its total revenue and half of group earnings before interest, tax, depreciation and amortization (EBITDA) from its international mobile business.

KPN's share of its home market, both residential and business customers, is under threat as it competes with Vodafone and Deutsche Telekom AG (Bonn, Germany), which operates under the T-Mobile brand, and increasingly with restructured cable firms Ziggo and UPC.

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