• Dutch telephone operator sells 150 million shares to cut stake
  • KPN to return about 70 percent of proceeds to shareholders

Royal KPN NV, the biggest telephone operator in the Netherlands, raised 805 million euros ($865 million) selling Telefonica Deutschland Holding AG shares and said it plans to return most of the proceeds to its shareholders.

The sale of 150 million shares for 5.37 euros apiece reduces KPN’s stake in the German phone carrier to 15.5 percent from 20.5 percent, according to a statement Tuesday. KPN agreed to not to sell any of its remaining Telefonica Deutschland shares for 90 days.

The Dutch operator intends to return 70 percent of the proceeds to shareholders through a dividend paid in 2016. It’ll use the rest of the proceeds to reduce net debt and strengthen its financial position.

KPN is trying to fend off intensifying domestic competition from rivals such as Tele2 AB and Deutsche Telekom AG’s T-Mobile by investing in better services and network infrastructure, while it sold its foreign telecoms operations in the past few years. It received the Telefonica Deutschland shares as part of an $11.3 billion sale of E-Plus, its German mobile-only unit, to Spain’s Telefonica SA in 2014.

Proceeds from a sale of the company’s Telefonica Deutschland shares may also be used for future takeovers, Chief Financial Officer Jan Kees de Jager said in an interview with Bloomberg two weeks ago.

Telefonica Deutschland shares fell 3.1 percent to 5.31 euros at 9:21 a.m. in Frankfurt, valuing the company at about 15.8 billion euros. KPN advanced 1.5 percent to 3.22 euros in Amsterdam, valuing the company at about 13.8 billion euros.

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