KPN shares plummet after investing in new mobile licences
17 December 2012 | Kavit Majithia
KPN shares have dropped by 15% on Monday after it cut its dividend to address the cost of new mobile licences.
It paid €1.35 billion for 15 separate 4G wireless licences in the Dutch mobile auction, a fee much higher than it expected to pay.
Tele2 of Sweden also entered the Dutch market after winning licences, in a move expected to increase competition and affect tariff pricing.
Sources told Reuters the entrance of Tele2 will intensify medium term competition in the Dutch mobile market, and will have an adverse affect on KPN returns from its mobile business in the country.
KPN said it would not pay a final dividend for 2012 and lowered dividend forecasts for next year. It has already cut its dividend forecast to 0.35 Euros from 0.90 Euros for this year. Market watchers have recently expressed concerns about KPN’s ability to pay dividends to shareholders considering its burgeoning debt.
In the Dutch mobile auction KPN, Vodafone, Deutsche Telekom and new market entrant Tele2 won licences for 4G, raising €3.8 billion for the Dutch state.
In a separate move, KPN announced it has sold off its Spanish operations to France Telecom as part of a strategy to exit out of core markets. It did not disclose details of the divestment.