Royal KPN NV, the Dutch phone company partly controlled by Carlos Slim’s America Movil SAB, halted the sale of its Belgian mobile-phone unit Base, saying the non-binding offers it received were unsatisfactory.
The bids for the mobile-phone unit reflected the “current difficult financial market conditions and didn’t take Base’s strong position and outlook into account,” the Hague-based KPN said today in a statement.
The Dutch operator, led by Chief Executive Officer Eelco Blok, began a sale of Base after discussions on a potential merger involving its E-Plus wireless unit in Germany failed. Base may fetch 1.8 billion euros ($2.2 billion), people with knowledge of the matter have said. KPN may need to cut its dividend further after reducing its forecast 61 percent to 35 cents a share last month, said Jeffrey Vonk, an Amsterdam-based analyst at ING Groep NV.
“We see potential for a dividend cut and or rights issue,” Vonk wrote in an investor note. He has a hold recommendation on KPN. The phone company’s leverage is “at the high end of the financial framework.”
KPN dropped 1.8 percent to 6.54 euros as of 9:07 a.m. in Amsterdam. That values the company at 9.4 billion euros.
During the second quarter, KPN unsuccessfully tried to stop Mexico City-based America Movil from increasing its stake in the phone company to 28 percent. America Movil pushed through its 8 euro-a-share tender and expanded its holding in KPN for about 3.07 billion euros in June.
Mexican billionaire Slim’s America Movil is establishing footholds in Europe as the continent’s debt crisis hurts the value of phone companies in the region. America Movil acquired 21 percent of Telekom Austria AG alongside the KPN purchase in June.
While the unsuccessful sale is “negative,” the overall impact isn’t “significant,” Victor Bareno, an Amsterdam-based analyst at SNS Securities, said in a note. He has suspended his recommendation on KPN. “Base accounts for just 6 percent of total enterprise value and as far as the financial condition is concerned, the recently announced dividend cut already gives KPN a bit more breathing space.”