Bloomberg News

KPN Shareholders Vote in Favor of 3 Billion-Euro Share Sale

April 10, 2013

Royal KPN NV (KPN), the Dutch phone operator partly owned by America Movil (AMXL) SAB, said investors gave support for a 3 billion-euro ($3.9 billion) share sale as part of an effort to invest in operations and reduce debt.

Billionaire Carlos Slim’s America Movil, which owns about 27.5 percent of KPN shares, had agreed to support the share sale in return for the acceptance of two of its executives, Chief Financial Officer Carlos Garcia-Moreno and Oscar von Hauske, to KPN’s supervisory board.

The appointments were approved today, KPN said in a statement, and more than 90 percent of shareholders present at the annual meeting at corporate headquarters in The Hague approved the rights issue.

KPN completed a 2 billion-euro bond program in March. The Dutch carrier needs the money to strengthen its balance sheet after spending 1.35 billion euros on wireless spectrum in the fourth quarter. Investing in faster mobile networks is key for carriers as consumers increasingly use smartphones to surf the Web, download music and watch videos. KPN also faces increased competition in the Netherlands from Stockholm-based Tele2 AB. (TEL2B)

Strategic Flexibility

“The proceeds of the capital raise will increase KPN’s financial and strategic flexibility and will enable KPN to continue to invest in its operations and to reduce its net debt level,” the company said. Details on the sale including price and number of shares will be announced after first-quarter results are released April 23.

Shareholders including Dutch retirement plan PGGM and investor group VEB criticized KPN management and the supervisory board at the meeting for the way the company handled America Movil’s stake purchase last year.

Chief Executive Officer Eelco Blok attempted unsuccessfully to defend KPN last year against a 2.6 billion-euro offer from America Movil for the stake in the company and failed to sell its Belgian mobile-phone unit, Base. The company also ended discussions on a potential merger with Telefonica SA (TEF) involving KPN’s E-Plus wireless unit in Germany.

“I believe today, we have been able to explain very well to our shareholders how we’ve come to the the decisions we made,” Blok said after the shareholder meeting.

KPN shares, which rose as much as 9.8 percent earlier today, pared gains after the annual meeting actions, and closed 5.3 percent higher in Amsterdam at 2.81 euros, raising the company’s market value to 4 billion euros.

The stock has advanced for two days as Telefonica’s willingness to sell its Telecom Italia SpA (TIT) stake renewed speculation on future consolidation in the German mobile market.

KPN is currently not in talks with Telefonica, but the company still thinks a merger with its O2 unit could generate synergies of as much as 5 billion euros, Blok said after the meeting.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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