Turbulent takeover rumors have little impact on KPN, for now

Turbulent takeover rumors have little impact on KPN, for now

15 June 2021Reading time: 3 minutes

KPN had a great start this year, but did not manage to surprise in financial terms. Analysts, meanwhile, are positive about KPN’s prospects because of the lower capital expenditures and further stabilization of revenue that lie ahead.

Takeover anticlimax

At the beginning of May, telecom company KPN announced that it had rejected two takeover attempts earlier this year. The Swedish investment fund EQT in cooperation with the American Stonepeak, wanted to take over KPN for an as yet undisclosed amount.

According to the British newspaper Financial Times, EUR 3 per share would have been offered, valuing KPN at a total of EUR 18 billion. In addition the American private equity fund KKR also made an offer for KPN.

Although the latter has dropped out after the rejection, the combination EQT and Stonepeak would not have given up the fight just yet. Both investors are said to have submitted a investment plan of EUR 4 billion, which further emphasizes the intended long-term relationship. For now KPN has hung up on any takeover conversation.

The fact that KPN was able to turn down both unsolicited takeover attempts relatively easily, is thanks to the foundation/watchdog Preferente Aandelen B. As a result, a takeover without the approval of higher management is simply impossible. In 2013, the importance of the foundation was revealed when the Mexican telecom company América Móvil made an unsuccessful takeover attempt.

Deutsche Telekom wants to get free play in the Dutch market

Nevertheless, a new takeover hunt could still arise in the Dutch telecom market in due course. At the end of May, Deutsche Telekom announced that it was considering selling the Dutch division of T-Mobile. Although this plan is still in its infancy, the German telecom company would like to have an amount of EUR 4 to 5 billion for the Dutch subsidiary.

The sale of T-Mobile Netherlands would give Deutsche Telekom the opportunity to invest again in other Dutch activities. A takeover attempt at KPN cannot be ruled out, but for now this is still purely speculative.

Accelerated fiber roll-out

Due to all the takeover rumours, one would almost forget that KPN's focus in the past period was mainly on stabilizing the results and the further roll-out of the Dutch fiber network.

In March, KPN announced that it will be collaborating with APG to further expand its fiber network. The partnership involves a total investment of EUR 1 billion over the next five years for the construction of 900,000 fiber optic connections. Thanks to the accelerated investments in its own fiber network, the number of new broadband subscriptions grew with 47,000 in the past quarter.

Partly due to disappointing revenues from the business segment and roaming, first-quarter revenue fell by 2.9 percent on an annual basis to EUR 1.3 billion. Thanks to cost savings on financing and lower depreciation, KPN saw its annual profit increase by 18 percent to EUR 141 million. Revenue per subscriber also increased, thanks to the improved network quality.

In the past quarter, KPN's share price showed little reaction to all takeover rumors and moved between EUR 2.70 and 2.80.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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08/12/2021 16:39:33