Bloomberg
KPN Belgian Sale Said to Attract Xavier Niel, Bain, CVC
By Matthew Campbell and Anne-Sylvaine Chassany - Apr 20, 2012 12:01 AM GMT+0200
French telecom billionaire Xavier Niel, Bain Capital LLC and CVC Capital Partners Ltd. are among those that may bid for Royal KPN NV’s Belgian mobile phone unit, people with knowledge of the situation said.
Buyout firms Apax Partners LLP and Providence Equity Partners Inc. are also considering bids for the unit known as BASE, said the people, who declined to be identified as the preparations are private. KPN, the Netherlands’ largest phone company, this week said it was beginning a “comprehensive review” of the future of BASE, which people familiar with the matter said may fetch about 1.8 billion euros ($2.4 billion) in a sale.
Private-equity firms are positioning themselves to take control of assets being sold by Europe’s former phone monopolies as the costs of new network technology and heavy regulation weigh on operators’ performance. Apax in December agreed to buy Orange Switzerland unit for $2.1 billion from France Telecom, which is trying to shed some European operations in favor of expansion in the Middle East and Africa.
Spokesmen for CVC, Apax and Bain declined to comment. A spokesman for Providence could not immediately be reached for comment.
Interest from the buyout firms, which typically profit by cutting costs and streamlining operations at companies they acquire, may be lukewarm as KPN has run BASE effectively, leaving relatively little room for improvement, one of the people said. The unit is Belgium’s third-largest mobile operator, after Belgacom SA (BELG)’s Proximus and France Telecom SA (FTE)’s Mobistar.
Profit Erosion
KPN is struggling to maintain profits while investing in its domestic broadband network. The Hague-based company said in January it would accelerate a restructuring program that will cost 4,000 to 5,000 jobs after it predicted lower profit and cash flow this year.
It may also face new competition at home as the Dutch government reserves space for new entrants in an upcoming auction of mobile frequencies. The arrival this year of a fourth full-service mobile operator in France, the Free Mobile brand founded by Niel, has eroded sales for larger competitors.
Bidding for BASE would mark another major international foray for Niel, whose 61 percent stake in Free’s parent company is worth about 3.4 billion euros. He also made a bid for Orange Switzerland in partnership with Goldman Sachs Group Inc.’s private-equity arm.