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KPN, the Dutch telecoms operator, on Wednesday scrapped the sale of its Belgian mobile unit Base after it failed to attract a suitable offer.
“[The] current difficult financial market conditions are reflected in unsatisfactory non-binding offers for Base,” KPN said. “The non-binding offers did not take the strong position and outlook of Base into account.”
The decision to cancel the sale comes two days after Telenet, Belgium’s cable operator, pulled out of the race to acquire Base.
KPN, which decided to sell Base in July after it cut its annual dividend from €0.85 the year before to €0.35 and promised to take swift action to reduce the group’s debt exposure, hoped to net between €1.4bn and €1.8bn from the sale.
However, most analysts warned earlier this year when the auction was announced that, at such high valuations, it would have been difficult for any company to justify the acquisition of a relatively small mobile operator. Base is the third-largest mobile phone operator by sales in Belgium.
“They’ve done the right thing,” a London-based banker said. “They need to find a better way of selling the asset at a more attractive price.”
Like several large European telecoms groups, KPN has been struggling to boost margins due to rising competitive pressures. In the second quarter of 2012 its net profit plummeted 24 per cent to €315m compared with a year ago as earnings before interest, tax, depreciation and amortisation fell 13 per cent to €1.14bn.
The poor performance of KPN, however, depressed the group’s share price and made it an acquisition target for a number of large international telecoms groups.
Eelco Blok, KPN chief executive, tried to block Mexican telecoms group América Móvil, owned by billionaire Carlos Slim, from acquiring 28 per cent of its shares. He advised shareholders to reject the bid as he viewed Mr Slim’s €8 a share offer as too low a price for a stake that could give the Mexican group significant control over the company.
However, Mr Slim – the world’s richest man, according to Forbes – finally managed to acquire the stake and is increasingly involved in the management of the group.