KPN on Monday agreed to sell its Belgian mobile operator Base to Telenet for €1.325 billion in cash.
Liberty Global-owned Telenet said the deal will enab le it to meet growing demand from customers for fixed and mobile services. Telenet is a cable operator but has built a presence in the mobile space with its mobile virtual network operator (MVNO) brands.
"Through the acquisition of Base Company we have made a significant step to secure long-term mobile access conditions, ensuring we are well positioned to effectively compete for the future growth opportunity of mobile data," said Telenet CEO John Porter.
Telenet’s MVNO operations, which it markets through its King and Kong tariff plans, had 895,000 subscribers at the end of last year, according to Liberty Global. At the same date, Base had close to 3.3 million customers.
Telenet said it expects the deal to generate annual opex and capex synergies of around €150 million, mainly driven by the migration of its MVNO customers to Base’s network. The cableco also pledged to invest €240 million in its operations in the next few years, including investments in Base’s mobile network and in the integration of the two businesses.
"This transaction represents a unique opportunity to secure ownership of mobile capacity at an attractive price together with an efficient financing structure," Liberty Global said. Telenet will fund the deal through €1 billion in new debt and existing liquidity.
"Given Telenet’s scale in Belgium it can absorb the smaller Base business quickly and efficiently," said Mike Fries, CEO of Liberty Global.
"Elsewhere in Europe we will continue to focus primarily on our existing MVNO arrangements and rapidly developing WiFi networks to provide seamless mobile voice and data services to our customers," he added.
For KPN the deal marks its exit from another major European market, following the sale of its E-Plus business in Germany to Telefonica last year.
"Following this valuable transact ion, KPN will fully focus on its successful integrated access strategy in the Netherlands," the Dutch incumbent said, in a statement.
"This transaction not only shows our commitment to realise an attractive return for our shareholders, but also positively contributes to Base Company’s market positioning," added KPN chief executive Eelco Blok.
The telco said it will use the proceeds of the sale "to create maximum value for shareholders" and said it will provide more details once the transaction closes.
The companies did not say when they expect to complete the deal, which is subject to various regulatory approvals. Telenet will be required to pay KPN a break-up fee of €100 million should competition bodies decline to give the deal the green light.
Together Telenet and Base would have reported adjusted revenues of €2.4 billion last year and adjusted EBITDA of €1.1 billion, Telenet said.
