Dutch selloff of KPN fans takeover fears

Dec 07, 2005

Few industries have been directly affected by sweeping technological changes than the telecommunications sector, but it has also remained one of the most closely controlled by the public sector worldwide. European telecommunications groups are no exception, with many with their respective governments as a sizeable, if not the biggest, shareholder in the company.

In the case of the Netherlands, however, the government is actively reducing its shareholding in the country's biggest network provider, which has about 7.4 million domestic subscribers, in addition to about 17 million mobile subscribers in Belgium and Germany. The Dutch government announced Wednesday that it would halve its stake in KPN to 8 percent from 16 percent by selling off 105 million ordinary shares, or about $1.65 billion's worth of stock, in the company to Dutch banking group ABN AMRO Rothschild.

Moreover, the government said it will relinquish its special share in KPN, thereby renouncing its special voting right that allows it to veto bids, which it had had since the company went public in 1994. In addition, the government made clear that it will sell off its remaining stakehold in the company by the end of this year. KPN is listed in the U.S., British, and German as well as Dutch stock markets.

"The Dutch state shall dispose of its special share in KPN as soon as possible and, in any event, no later than 31 December 2005," the Dutch Finance Ministry said in a statement.

KPN's shareholding structure sharply contrasts with Swisscom, the Swiss telecommunications giant, which has been in the media limelight in recent months as it attempted to buy out Irish rival Eircom.

Swisscom had publicly declared its intent to buy out the Irish group, but the move was put to an abrupt end by intervention from the Swiss government, which remains its single-biggest shareholder with 66 percent of total stocks. The Swiss government said it would block any effort by Swisscom to buy out any foreign telecommunications company, including Eircom.

Such government intervention, however, has created a divide between the company's board members and its principal shareholder. In fact, Swisscom stated earlier this week that while it will not be pursuing the Eircom deal for now, it argued that "in view of the limited opportunities for growth within Switzerland, the company has in recent years been examining the possibility of purchasing companies abroad subject to rigorous acquisition criteria, i.e., profitable telecoms market leaders in Europe, majority holdings with clear management control by Swisscom, and restrictions on size but with a sound, stable financial base."

Moreover, it remained critical of the government's decision to intervene in the Eircom deal, stating that "public controversy surrounding questions related to the Swiss government's majority shareholding in Swisscom, plans for acquisitions abroad, and the payout policy, has given rise to uncertainty among shareholders, customers, and employees."

As a result, some industry analysts anticipate the government will reduce its shareholding in the company down the line so that Swisscom can indeed pursue its plans to expand overseas in addition to strengthening its domestic market.

Yet on the other hand, there are concerns that by decreasing the Dutch government's shareholding in KPN to less than 10 percent, the company will become more vulnerable to leveraged buyouts and ultimately rid the country of a national carrier. Indeed, there is already speculation that Japanese telecommunications giant NTT DoCoMo may bid for the company.

Copyright 2005 by United Press International

Explore further: EDAG car with textile skin set for Geneva show

add to favorites email to friend print save as pdf

Related Stories

Ag-tech could change how the world eats

4 hours ago

Investors and entrepreneurs behind some of the world's newest industries have started to put their money and tech talents into farming - the world's oldest industry - with an audacious agenda: to make sure there is enough ...

World's rarest cetacean threatened by illegal gillnets

5 hours ago

The world's rarest cetacean could disappear in less than four years unless immediate action is taken by the Mexican government to protect it from entanglement in gillnets deployed illegally in its Gulf of California refuge, ...

Enviro-tracker is wearable for citizen monitoring

6 hours ago

Mobile hardware and software allow us to count our steps, and to count our calories, but a Vancouver, Canada, startup group asked, what about tracking our environment? TZOA was founded in 2013. Laura Moe, ...

In Curiosity Hacked, children learn to make, not buy

6 hours ago

With her right hand, my 8-year-old daughter, Kalian, presses the red-hot soldering iron against the circuit board. With her left hand, she guides a thin, tin wire until it's pressing against both the circuit board and the ...

Recommended for you

Timeline of the Sony Pictures Entertainment hack

19 minutes ago

It's been four weeks since hackers calling themselves Guardians of Peace began their cyberterrorism campaign against Sony Pictures Entertainment. In that time thousands of executive emails and other documents ...

Two more former Sony workers sue over data breach

19 minutes ago

Two more former employees of Sony Pictures Entertainment are suing the company over the massive data breach in which their personal and financial information was stolen and posted online.

Second security clearance investigation contractor hacked

49 minutes ago

Federal officials say the private files of 48,439 workers may have been compromised by a computer breach at government contractor KeyPoint Government Solutions Inc. The hacking incident is the second this year at a major ...

Digital dilemma: How will US respond to Sony hack?

1 hour ago

The detective work blaming North Korea for the Sony hacker break-in appears so far to be largely circumstantial, The Associated Press has learned. The dramatic conclusion of a Korean role is based on subtle ...

Constantly changing online prices stump shoppers

1 hour ago

Online shopping has become as volatile as stock market trading. Wild, minute-by-minute price swings on everything from clothes to TVs have made it difficult for holiday shoppers to "buy low."

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.