KPN’s mounting debt could lead to €4 billion sell in shares

KPN’s mounting debt could lead to €4 billion sell in shares

Dutch carrier KPN reportedly plans to cut its debt by selling €4 billion in shares, after it recorded a significant fourth quarter net loss.

The rights issue is subject to shareholder approval, and the company is thought to be open to raising part of the capital increase through equity-linked or other capital instruments.

The company’s revenues dropped by €3.3 billion in Q4, down 3% from 2011. Overall, the company recorded a 3.5% drop in revenues and a 12% drop in earnings in its 2012 annual results, compared to 2011.

KPN, which is partly owned by Carlos Slim’s América Móvil, spent an unexpectedly high €1.35 billion on 4G spectrum at the end of last year, which worsened its debt-to-earnings.

The company has continued to struggle in its domestic market due to increased competition, with the country’s 4G auction seeing the entry of a fourth network operator, Vodafone Group and Deutsche Telekom’s T-Mobile unit.

Last year, it tried unsuccessfully to sell its Belgian mobile unit Base, as well as held unsuccessful discussions on a potential merger involving its German mobile unit, E-Plus, with Telefónica’s German unit.

During 2012, however, the company successfully agreed to sell its German mobile tower assets for €363 million, and also sold its Ortel Mobile Switzerland subsidiary to Treternity AG for an undisclosed fee.

“In 2012, KPN continued to face a challenging environment. The adverse macro-economic conditions continued to weigh on consumer confidence and on the investment plans of our business customers. Moreover, competition intensified in our mobile markets,” said KPN’s CEO Eelco Blok.

“The financial performance of our businesses in 2012 was largely within the outlook ranges, though supported by asset disposals and somewhat below our expectations at the start of the year.”

Full a full insight into the impact of a challenging financial climate on European carriers, click here.