Rumour Mill: KPN, Telefónica in German merger talks

KPN and Telefónica are in advanced negotiations over the future of their German mobile operations, according to Dutch news service NOS, which cited unnamed sources.

KPN is keen to sell its German E-Plus unit as part of its plan to prevent América Móvil from acquiring a larger holding in KPN, while Telefónica has signalled its intent to list its O2 Germany subsidiary.

Without confirming any discussions, KPN said that the company's supervisory board had agreed to "review the strategic options for E-Plus to unlock value embedded in the German business." In a presentation to shareholders, KPN said there is "material synergy opportunity available through in-market consolidations," in a reference to Germany.

This statement triggered Robin Bienenstock, an analyst at Sanford C. Bernstein, to comment: "This seems to us to be a fairly pointed message to Telefónica," Bienenstock wrote in an update to clients. Rabobank analyst Frank Claassen noted: "The timing is interesting. Yesterday Telefónica opened their door, and today KPN did," according to Bloomberg.

However, a Telefónica spokesman emphatically told Reuters that the company is not going to bid for all or part of KPN. 

KPN is also actively searching for investors in China and the Middle East who might want to own a substantial stake in the company,  according to a report in the Dutch newspaper Het Financieele Dagblad, which cited unnamed sources, with CFO Eric Hageman already said to have spoken to sovereign wealth fund China Investment Corp at the start of this year.

Commenting on the offer from América Móvil, which has been rejected by KPN as "opportunistic," KPN CEO Eelco Blok said on a conference call: "We continue to have constructive discussions with América Móvil on potential synergies," adding that the company was also evaluating the future of its Belgian and Spanish businesses.

For more:
- see this NOS article (translated via Google Translate)
- see this Bloomberg article
- see this Reuters article
- see this separate Reuters article

Related Articles:
KPN hits back at América Móvil offer, unveils new strategy
Rumour Mill: KPN's Belgian arm moves closer to auction, is E-Plus next?
Report: Iliad eyes purchase of KPN's Belgian unit
KPN exploring 'strategic options' for Belgian unit
Will Telefónica and KPN merge their German mobile units?
KPN CEO: Merging with O2 Germany makes sense

Suggested Articles

Sprint said it will offer discounted service to customers age 55 and above.

Unlimited data plans placed a strain on carrier networks last year, but according to OpenSignal the carriers met the challenge.

Verizon plans to bring 5G to four U.S. cities this year and hopes to have standards-based equipment in place for some of those deployments.