Will Telefónica and KPN merge their German mobile units?

Telefónica and KPN have both initiated discussions to merge their respective German mobile businesses E-Plus, and O2 Germany, according to O2 CEO Germany René Schuster. However, the approaches from both firms have never moved beyond informal discussions. "Every time I talk to them they say they're not for sale, and every time they talk to us we say we're not for sale," Schuster said in an interview with Reuters at a conference in Munich.

Schuster added that he did not foresee that German regulators would block the consolidation of the mobile market from four operators to three. "I could never say what the regulator would do but all the analysis that we've seen leads me to believe they wouldn't oppose it," he said.

However, any suggestion of a merger has been squashed by KPN CEO Eelco Blok, who said that no talks are currently underway. However, Blok said at an investor conference in November that it would make sense to merge the two companies' German operations.

KPN stated earlier this week that its weak fourth-quarter results would mean a cut to its 2012 forecast, and that it would sell the international IT division of its Getronics unit. KNPN said it will sell Getronics' European operations outside the Netherlands to Germany's Aurelius and its Latin American business to private equity firm OpenGate Capital, each for undisclosed sums. However, KNP said the businesses had combined sales of €665 million last year. KPN bought Getronics for €776 million in 2007

The sales triggered speculation that KPN may be moving toward a radical restructuring, but analysts cautioned against that. "Selling Getronics International will tantalise some investors with the possibility that this company [KPN itself] will either be taken private or broken up altogether," Robin Bienenstock, an analyst at Bernstein Research, told Reuters. "But those hopes are unrealistic as KPN's results clearly show that KPN Netherlands needs KPN Germany's cash in order to right itself."

For more:
- see this Reuters article
- see this separate Reuters article
- see this AP article

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