KPN to Buy Nozema

THE HAGUE, The Netherlands -- KPN and the Dutch State have, in principle, reached an agreement in which KPN will acquire all shares of 'Nozema Services' for EUR 75 million.

By purchasing Nozema's Radio and Television activities, KPN is taking a major step forward in the implementation of its 'multi play' strategy, aimed at turning KPN into a provider of fixed and mobile telephony, broadband internet and TV services.

The cash acquisition will be financed from KPN's existing financial resources. The takeover still needs approval from the Netherlands Competition Authority (NMa) as well as positive advice from the Works Councils of both KPN and Nozema Services. In view of the NMa's publicised concerns surrounding access to KPN's communications towers, KPN has reached agreement with the Dutch state that it will outsource the management of tower access for the purposes of analogue radio to an independent third party. The details will be discussed with the NMa in due course.

The transaction means that KPN can roll out its nationwide digital ether television service earlier than planned and from late 2006 it will be able to provide all Dutch consumers with an alternative to cable. The takeover guarantees Nozema Services' future, even after the migration to digital technologies makes current analogue TV and radio services a thing of the past.

Through the acquisition of Nozema, which holds 40% of Digitenne, KPN will double its stake in Digitenne to 80 percent. KPN has been one of the largest shareholders and financial backers of Digitenne since it was first set up. From the start of KPN's digital ether TV activities, KPN has also been Digitenne's biggest customer.

KPN has well over 100,000 digital TV customers on the basis of a Digitenne package. In addition, Digitenne has around 60,000 customers it has attracted through retail and wholesale activities. In all, these 160,000 customers make up over 2 percent of the Dutch TV market as a whole. Taking only the current DVB-T broadcasting area into consideration (mainly in the Randstad), this market share is more than 4 percent.

KPN Telecom NV