Having failed to win any of the crucial 800MHz spectrum in the German auction, industry analysts are beginning to question the viability of KPN's German mobile subsidiary, E-Plus.
The company, which has dismissed concerns that its failure to gain entry to the 800MHz band would stop it from becoming a player in the high-speed mobile data market, was hoping to access this spectrum by partnering with O2 Germany.
While this might have been a route forward in the recent past, O2 Germany managed to gain 800 MHz spectrum at a lower than expected cost, and is now said to be less keen on partnering with E-Plus.
Any idea of O2 Germany merging with E-Plus was quashed by BPI analyst Pedro Pinto, claiming that KPN's defeat in the auction meant it really had lost some of its attraction for Telefonica as a possible acquisition target. "Any possible merger with KPN is now on the back burner."
Having been left without an 800MHz option, Informa analyst Dario Talmesio believes E-Plus has positioned itself to be sold. A sale "would be better now than later for KPN. Later is risky because their business would deteriorate."
However, the revenues generated by E-Plus are key to the overall profitability of KPN's international mobile operations--generating a quarter of KPN's first quarter €3.3 billion revenue and a third of core profit.
This level of success has prompted some financial commentators to state that KPN is not considering any sale of E-Plus. At a recent analyst meeting, KPN's CEO, Ad Scheepbouwer, gave no indications of plans to sell the company's German mobile operations.
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