mmO2 sells Dutch ops for peanuts
mmO2 is to sell its Dutch arm to an investment company for just EUR25 million.
In a statement, mmO2 said that independent private equity and corporate finance group Greenfield Capital Partners would buy the struggling unit in a cash deal expected to close by the end of May. The announcement ends months of speculation over the fate of the business, which mmO2 has been looking to unload since the start of 2003.
Although the sale of O2 Netherlands was widely expected, the price of EUR25 million has already been described as disappointing. Still, the move will allow mmO2 to exit the Dutch market, which has five operators but a population of just 16 million. In the Netherlands, the company has never made a profit, although it holds a 3G licence for which it paid almost STG270 million.
In the year to 31 March 2002, O2 Netherlands had a turnover of STG200 million, with an EBITDA loss of STG51 million and an operating loss before goodwill and exceptional items of STG119 million. The Dutch mobile telecom currently has about 750 employees and had approximately 1.25 million customers.
"We believe that this deal is in the best interests of mmO2 shareholders and also represents a good opportunity for the Dutch business, its employees, customers and suppliers going forward," commented Peter Erskine, chief executive officer of mmO2, in a statement. "The Greenfield offer enabled us to sell at a realistic valuation given market conditions in the Netherlands."
The British company said that following the sale, the disposal will result in a slight improvement in mmO2's EBITDA margin and there will be a "minimal effect" on revenue and absolute EBITDA. The sale will also result in a provision for loss on disposal in the order of STG1.4 billion, the company said, which will be treated as an exceptional item in the year ended 31 March 2003.
Greenfield's plans for O2 Netherlands remain somewhat unclear, although the business is expected to continue to operate and Stef van Doesburg, partner of Greenfield Capital Partners, noted that the buy was complementary to the group's telecoms businesses, including Enertel NV, the number two dial-up operator in the Netherlands. "This acquisition supports our overall strategy of investing in companies that offer a competitive range of fixed and mobile services," van Doesburg said.
It has also been reported that when the acquisition closes next month, O2 Netherlands will change its name back to Telfort Mobiel, after re-branding to O2 only a year earlier. The Dutch mobile company was founded in September 1996 as a joint venture between BT and Nederlandse Spoorwegen NV, the Dutch railway company, with BT holding a 50 percent stake. It received a mobile licence in 1998 and became of subsidiary of mmO2 in late 2001 when mmO2 spun off from British Telecom.
Meanwhile, speculation still churns over the future of O2 Germany, which has also been pegged as a possible acquisition target, with KPN the top suspected buyer. mmO2 has so far been unwilling to confirm rumours of a sale of its German business, which only recently became profitable.