KPN/Telefonica back on again??
Friday June 9 2:33 PM ET
KPN Helps Stoke Fresh Telefonica Merger Hopes
By Caroline Jacobs
AMSTERDAM (Reuters) - Dutch carrier KPN Telecom (KPN.AS) on Friday breathed fresh life into market speculation that it was hoping to revive an abandoned merger with Telefonica SA (TEF.MC), Spain's biggest telecommunications company.
KPN announced that it and Telefonica, whose planned tie-up was aborted last month, had asked the Spanish and Dutch governments to clarify their stances on a possible merger that could create Europe's number four carrier with a market value of around 125.5 billion euro ($120 billion).
KPN has looked sidelined in Europe's fast-consolidating industry since it ended talks with Telefonica amid Spanish government and shareholder objections to a deal that would leave the Dutch state with a key shareholding in the new company.
``(We have requested) that each government clarify its position with a view to finding a solution with regard to its required support that is acceptable for the parties involved,'' a KPN spokeswoman said.
The letters to the governments were sent two weeks ago but neither had yet replied, she added.
The Dutch Transport Ministry said on Friday there were no ''active official talks'' between the Dutch government and KPN Telecom (KPN.AS) or Spain's Telefonica (TEF.MC). Ministry spokeswoman Lilly van Geest said letters from the two telecommunications companies listed the advantages of combining the two companies but did not ask for any concrete steps to be taken.
She declined to say whether there were any informal contacts or discussions with the two companies.
Hopes Remain Of Dutch-Spanish Deal
Although KPN has since announced an alliance with Japan's biggest mobile phone company NTT DoCoMo (9437.T), under which the Japanese giant will take a 15 percent stake in the Dutch group's mobile venture, hopes remain of a new Spanish agreement.
KPN held the Spanish and Japanese talks in parallel, with all three parties fully up to date on their status, which helped fuel talk that all three companies might announce a link-up. Such a deal may still be on the cards. For on Wednesday, the New York Times reported that Telefonica Chairman Juan Villalonga had been trying to gain support among the company's board members to restart merger negotiations.
Telefonica declined to comment.
Analysts Remain Unconvinced
But some analysts remain unconvinced that objections to a merger -- which included Spanish government concerns about the Dutch state's 43.5 percent stake in KPN and complications surrounding stakes held by KPN's partners BellSouth (NYSE:BLS - news) and Qwest Communications (NYSE:Q - news) -- could be surmounted in one month.
For so far, the Dutch government has said only that it would gradually reduce its stake in KPN over 18 months. Madrid, which can block any takeover through a golden share in Telefonica, has called for an immediate sale.
But any deal, which is likely to leave the biggest carrier in the Spanish-speaking world with around 60 percent of a combination with KPN and a Japanese giant that has gained respect for its technology, would be a coup for Villalonga. ''If the two governments reach an agreement and NTT is part of a deal too, then that would be a great move for Telefonica,'' said Nahum Sanchez, a telecommunications analyst with brokers Benito y Monjardin in Madrid. Telefonica has amassed a telecommunications empire in Latin America over the last ten years and more recently has been trying to break into more developed markets.
It announced a deal to buy Dutch television producer Endemol Entertainment (EMOL.AS) for 5.5 billion euros in March and its Internet arm Terra Networks (TRR.MC) has agreed to buy U.S. search engine Lycos (NasdaqNM:LCOS - news) for $12.5 billion. |
