By Marietta Cauchi, Jessica Hodgson and Archibald Preuschat
LONDON--Royal KPN NV (KPN.AE) is pushing ahead with the sale of
its Base mobile phone business in Belgium even as America Movil SAB
(AMX), which now owns just under 30% of KPN, has expressed its
disapproval of a disposal, people familiar with the situation told
Dow Jones Newswires on Wednesday.
KPN hired JPMorgan Case & Co. (JPM) to auction Base last
month as part of the Dutch telecom's attempts to turn around its
flagging prospects. The unit has attracted the interest of several
buyout firms as well as Belgian cable operator Telnet Group Holding
NV (TNET.BT).
First-round bids are due at the end of July. Private equity
firms including Providence Equity Partners and Carlyle Group have
expressed an interest and Cinven is working on a joint bid with
Telenet, people said.
It is unclear how much of this interest will translate into
formal bids because of America Movil's attempts to boost its stake
and its opposition to a sale of Base--advisers for potential
bidders have told Dow Jones Newswires that they are uncertain as to
whether a sale will go ahead.
In May, the Mexican telecommunications company, which is
controlled by billionaire Carlos Slim, launched an offer to raise
its stake in KPN to about 28% from 20.9% as part of its plans to
build a significant presence in Europe with minority stakes in
several phone companies.
The KPN board opposed the offer, saying it undervalues the
company.
At a conference call in June, shortly after it acquired a 21%
holding in KPN, America Movil Chief Financial Officer Carlos Garcia
Moreno said that AMV was in part attracted to KPN because the
Netherlands and Belgium have high gross domestic product per capita
and consumers with relatively low debt compared with other areas of
Europe. "These are the countries that are in better shape from a
fundamental perspective," he said.
America Movil, Latin America's largest wireless phone
provider--which operates in more than 18 countries in the
Americas--is seeking a beach-head to expand in Europe through its
stake in KPN and in a separate holding in Telekom Austria AG. The
company, fighting competitive and antitrust pressure on its home
turf, looks set to significantly shake up Europe's telecoms
landscape.
In June, an attempt by KPN and Spain's Telefonica (TEF)--America
Movil's most significant competitor in Latin America--to combine
their German units to create a competitor to keep America Movil at
bay, failed. Telefonica and KPN discussed a deal that would have
seen KPN's German unit E-Plus sold to Telefonica for roughly EUR10
billion but an agreement couldn't be reached.
One person said that America Movil has questioned the strategic
logic to the Base sale, but that it's unlikely to block the sale if
it generates a good enough price. Reports suggest the unit could be
worth as much as EUR1.8 billion.
Wednesday a spokesman for KPN said that all the statements the
company made at that time it put Base up for sale were still valid.
"The KPN boards have decided to start the sale process for Base in
July. The proceeds will be used to improve KPN's credit profile and
financial flexibility," KPN said June 21.
-Write to Marietta Cauchi at marietta.cauchi@dowjones.com
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