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KPN Beefs Up Belgian Biz

KPN Telecom NV (NYSE: KPN) announced today that its wholly owned subsidiary, KPN Mobile International B.V., will buy Tele2 Belgium, the Belgian operations of pan-European service provider Tele2 AB (Nasdaq: TLTO), for €95 million (US$128 million) in cash. (See KPN Buys Tele2 Belgium.)

KPN CEO Ad Scheepbouwer said last week that his company was in talks with Tele2 and that he wanted to "strengthen our Belgian business by means of smaller fill-in acquisitions." (See KPN Scopes Out More M&A and KPN Updates on M&A, Shares.)

In Belgium, KPN owns mobile operator BASE , which has 2.6 million customers for a market share of 22 percent, according to BASE's second-quarter results.

With today's acquisition, KPN gains a Belgian fixed-line business with 125,000 broadband subscribers and 200,000 narrowband subscribers. But the deal is not a fixed/mobile convergence (FMC) play.

The acquisition of Tele2 Belgium has more to do with BASE's distribution situation than with the potential for selling converged services.

According to KPN, the acquisition will expand BASE's distribution reach in Belgium. There will be cross-selling and up-selling opportunities to Tele2's customers, which will include bundled service offers. But mainly, the deal will expand BASE's presence in the country.

"We've extended our sales channels not just in terms of quantity, but also geographical spread," says a KPN spokesman. "Also, we can use [Tele2's ADSL] customer base for selling mobile services."

BASE has been working on improving its distribution capabilities. Earlier this month, the operator acquired a chain of 51 stores called Allo Telecom.

Even though Tele2 adds fixed-line assets to BASE's mobile operations, converged services are not at the heart of this deal.

"This does not mean than KPN has suddenly embraced convergence and will rush to buy fixed assets in Germany to complement its mobile business E-Plus," says the analyst team at Dresdner Kleinwort . "This deal is mainly for distribution and cross selling rather than fixed infrastructure."

KPN says it plans to operate Tele2 independently from BASE.

— Michelle Donegan, European Editor, Light Reading

Larry, Monkey 12/5/2012 | 3:03:48 PM
re: KPN Beefs Up Belgian Biz Stupid Flanders.
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