Liberty Global PLC’s Belgian unit agreed to buy Royal KPN NV’s local mobile phone business for 1.33 billion euros (US$1.43 billion) in cash as billionaire John Malone expands his European cable and telecommunications empire.
Telenet Group Holding NV, majority-owned by Malone’s Liberty Global, gains the Base network as it seeks to challenge larger Belgacom SA and Mobistar SA.
Telenet, which yesterday said it plans to finance the takeover with 1 billion euros of new debt in addition to existing cash, currently rents capacity from Mobistar.
Photo: Bloomberg
The deal lets Liberty Global build a Belgian business with 2.4 billion euros in sales, while also targeting savings of 150 million euros in the country.
Malone has expanded through purchases across Europe and London-based Liberty Global now owns cable and telephone operations stretching from Hungary to the UK. The company has also added TV content and production to drive growth.
The price values Base at eight times the unit’s estimated earnings before interest, taxes, depreciation and amortization for this year, the companies said.
KPN shares increased 2.7 percent to 3.25 euros at 9:44am in Amsterdam, as Telenet rose 4.2 percent to 54.67 euros in Brussels. Liberty Global lost 1.3 percent in New York on Friday.
The purchase gives Telenet about 3.3 million mobile subscribers, bringing the total to more than 4 million. That compares with more than 5 million for each Belgacom and Mobistar, which is majority-owned by Orange SA.
KPN chief executive officer Eelco Blok’s efforts to sell Base in 2012 were halted, because the bids were too low. With a sale of Base, The Hague-based KPN would have operations only in its home market of the Netherlands, since the carrier completed the sale of its German unit E-Plus to Telefonica Deutschland Holding AG last year.
Billionaire Carlos Slim’s America Movil SAB is the biggest investor in KPN, with a 21.4 percent stake. KPN holds a 20.5 percent stake in Telefonica Deutschland as a result of the sale, and Blok has said that he is open to sell if the right opportunity arises.
Base has said it is focused on increasing the share of customers with monthly contracts and their data usage in Belgium, where consumption remains relatively low. KPN said this month several parties had expressed interest in buying Base.
“The price is not too bad, I would have expected a little bit less,” Theodoor Gilissen Bankiers NV analyst Tom Muller said by telephone. “Now you have to wait and see how the consolidation in Europe is going to play out.”
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