Global Insight Perspective | |
Significance | KPN has snapped up Tele2's Belgian operations in a move that opens up the country's fixed-line market for competition. |
Implications | For KPN, the takeover of Tele2/Versatel Belgium marks the first real success in its renewed ambition to expand across Europe. |
Outlook | The takeover increases the scope for more competition in the Belgian fixed-line market as a KPN-backed Tele2 Belgium squares up to Belgacom and Telenet. |
Dutch telecoms giant KPN has snapped up Tele2's Belgian operations, in a move that expands the footprint of the KPN brand across Europe. KPN said its wholly owned subsidiary KPN Mobile has entered into an agreement for the acquisition of Tele2/Versatel Belgium for a consideration of 95 million euro (US$128.15 million). In a statement, KPN said the acquisition will allow its Belgian mobile unit, BASE, to further expand its regional distribution reach in Belgium, while driving greater revenue growth through cross-selling and up-selling opportunities, which will also include bundled product offers. "Tele2’s substantial residential subscriber base in specific regions and its deeply rooted position in the B2B market, will allow BASE to expand and grow its presence in Belgium as a result of this acquisition," the company said.
Commenting on the acquisition, Stan Miller, chief executive of KPN's international activities, said that BASE has now been empowered to grow its business in Belgium in a profitable way. "I believe that fixed-mobile substitution together with bundled broadband offerings will provide BASE with a competitive advantage. BASE will continue to grow its mobile and broadband offerings through partnerships, which remain a core part of its strategy.”, he said. KPN said it intends to run Tele2 Belgium independently from BASE (see Belgium: 14 August 2007: KPN in Talks to Buy Tele2/Versatel Belgium).
Outlook and Implications
KPN's Expansion Ambitions
The finalisation of the acquisition for Tele2 Belgium is another step for KPN's desire to expand beyond its highly mature Dutch market. Outside its Netherlands home market, the Dutch giant has mobile operations in Belgium and Germany. A recurrent expectation for the eventual merger of KPN and Belgium incumbent giant, Belgacom, has failed to materialise, and KPN may have opted for the Tele2 route to gain a foothold in the Belgian fixed-line space. Apart from Belgium, KPN is reportedly interested in France, and although it has ruled out a bid for France's third-largest mobile operator, Bouygues Telecom (perhaps for cost reasons), there have been reports that the Dutch player may enter the French mobile market as an MVNO. KPN is also eying an MVNO in Spain, and its effort to buy Austrian mobile operator, ONE, in May 2007 failed (see France: 16 August 2007: KPN Eyes French MVNO, Austria: 24 May 2007: KPN Eyes Austrian Mobile Company One, and Spain: 20 March 2007: KPN Eyes Spanish Mobile Market).
Shaking Up the Belgian Market
KPN's entry into the Belgian fixed-line market is bound to threaten Belgacom's established dominance. Presently, Belgacom's only real competitor is the cable player Telenet, and the presence of a big European telco will shake up the market. Telenet even tried to muscle KPN out by declaring its interest in Tele2 Belgium. For Tele2/Versatel Belgium, its scope for competition has not been acute as the company is just settling into its new structure following the reverse takeover of Tele2 by Versatel. The new enterprise operates its own DSL infrastructure and reported 131,000 residential and business DSL lines at the end of the second quarter of 2007 (see Belgium: 15 August 2007: Telenet Enters Race to Buy Tele2/Versatel Belgium, Europe: 26 January 2007: Tele2 to Sell Belgian and Dutch Operations to Versatel and Europe: 16 August 2006: Tele2, Versatel Merge Belgian, Dutch Operations).