Feeds

KPN offer stokes mmO2 bid excitement

Not going Dutch, just yet

  • alert
  • submit to reddit

Intelligent flash storage arrays

Speculation over the future of mobile operator mmO2 was rampant on Monday after Dutch telecoms company KPN made an offer for the firm.

The friendly offer, which was rebuffed on Friday when O2 said it had ceased talks with an unnamed operator, has prompted conjecture over whether the mobile arm of Royal KPN NV will now launch a hostile takeover. Numerous reports note that KPN has refused to rule out such a move, although the Financial Times cites a person close to KPN who said there was "zero chance" of a hostile bid.

KPN offered about £9.5bn, or £1.10 per share, for mmO2 in a stock and cash deal, according to The Guardian. Based on Friday's closing price in London, mmO2 has a market capitalisation of about £8bn. KPN, meanwhile, has recently received a fresh influx of cash after an unexpected tax settlement with Dutch authorities helped bring in €1.08bn in 2003 net profits as well as other benefits.

If combined, KPN Mobile and mmO2, the former wireless arm of British Telecom, would create a company with some 35 million subscribers in Europe, with operations in Germany, Belgium, the Netherlands, Ireland and the UK. Currently, KPN Mobile has around 15 million customers after adding 500,000 in 2003, while mmO2 has just over 20 million. The greatest cost-savings and synergies would likely come in Germany, where KPN-controlled E-Plus and O2 Germany are the number four and number three operators respectively.

There has been widespread speculation for years that KPN Mobile and mmO2 would merge, as both are now deemed too small to survive in a market dominated by the likes of Vodafone, Orange and T-Mobile, all industry giants. Amidst the guesswork, the names of other operators - Telefonica Moviles and Telecom Italia - have also been dropped several times over the years as possible suitors to mmO2, and these names have arisen again.

Analysts, though positive on the possible outcome of a deal at the right price, have not been overly optimistic that such a thing will happen. The value of mmO2, particularly O2 Germany, has long been a sticking point in earlier negotiations, and it has been suggested that the impasse will be no easier to resolve now than in years gone by.

In related news on Monday, KPN, the telecoms company that owns 98 per cent of KPN Mobile (with NTT DoCoMo owning two per cent), posted its sixth straight quarterly profit thanks to tax gains and cost cuts. The company said that net income in the last three months of 2003 rose to €1.639bn, well ahead of most estimates and up from €7m in the same period a year earlier. Fourth quarter operating revenue was €3.088bn compared with €3.136 bn in the same period a year earlier.

For the full 2003 year, KPN reported a profit after taxes of €2.731bn compared to a loss after taxes of €9.542m in 2002. Operating revenues for the full year rose to €12.209bn compared with €12.170 bn a year earlier.

"We have achieved most of the ambitious goals that we had set ourselves for 2003. Despite the competitive market environment, we have managed to deliver cash flow ahead of market expectations and we are now in a position to reward our shareholders by resuming dividend payments," said CEO Ad Scheepbouwer.

© ENN

Related stories

Mobile operators face EC action over roaming
O2 opens text services to the US
02 notches up 20m punters

Security for virtualized datacentres

More from The Register

next story
TEEN RAMPAGE: Kids in iPhone 6 'Will it bend' YouTube 'prank'
iPhones bent in Norwich? As if the place wasn't weird enough
Consumers agree to give up first-born child for free Wi-Fi – survey
This Herod network's ace – but crap reception in bullrushes
Crouching tiger, FAST ASLEEP dragon: Smugglers can't shift iPhone 6s
China's grey market reports 'sluggish' sales of Apple mobe
Sea-Me-We 5 construction starts
New sub cable to go live 2016
EE coughs to BROKEN data usage metrics BLUNDER that short-changes customers
Carrier apologises for 'inflated' measurements cockup
Comcast: Help, help, FCC. Netflix and pals are EXTORTIONISTS
The others guys are being mean so therefore ... monopoly all good, yeah?
Surprise: if you work from home you need the Internet
Buffer-rage sends Aussies out to experience road rage
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
prev story

Whitepapers

A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.