First, let's establish that this is all about E-Plus:
- AMXL has an interest in mobile only, as it sees an opportunity in Europe with low 4G penetration.
- Base (Belgium) is too small and KPN Mobile NL is small as well and too much hooked up to the fixed-line network. Hence, it's all about E-Plus.
Next, let's establish that AMXL is not amused with KPN's action to sell E-Plus to Telefonica Germany:
- AMXL's interest in KPN only pertains to E-Plus (see above).
- KPN apparently sold E-Plus without the approval of the AMXL supervisory board members (2 out of 8). Note: AMXL spent billions buying its 30% stake and supported KPN´s rights issue.
- AMXL cancelled the shareholder agreement, paving the way for the intended offer for KPN.
What will happen to E-Plus? A merger with Telefonica Deutschland will unleash synergies valued at EUR 5.0-5.5bn by KPN and Telefonica.
- KPN may still succeed in selling the asset to Telefonica Deutschland, because of the timing of its EGM. AMXL may then withdraw its offer for KPN, but will still be stuck with its 30% KPN stake.
- AMXL may stop the sale of E-Plus to Telefonica Deutschland, either through its intended takeover of KPN or through the KPN EGM (note: AMXL may already be a KPN stock buyer and have its stake increased beyond 30%). The KPN management will likely be replaced. America Movil may hold on to the mobile activities and sell the Dutch fixed-line operation. Next, AMXL may try to buy Telefonica Deutschland.
- Telefonica may launch a higher offer for E-Plus, trying to get approval from America Movil. If it succeeds, America Movil is stuck with the Dutch/Belgian assets of KPN.
- A third party may launch a counter offer for E-Plus. Only Liberty Global seems to be a candidate, as it too will see synergy potential from a takeover. Liberty is expanding into mobile and has a country-by-country approach, ranging from a full MNO in Chile to a 'heavy' MVNO in Belgium (with 2100 spectrum) and other places, to a WiFi focus in the Netherlands (with 2600 spectrum).
What will happen to the Dutch fixed-line activities of KPN?
- If AMXL gets stuck with the Dutch and Belgian units of KPN only, it may try to sell its stake (either 30 or 100%) in due course.
- If AMXL ends up with all of KPN, it may sell the Dutch fixed-line activities. In theory, there are several candidates: the Dutch government (afraid this 'vital' asset to come under foreign ownership), CIF (the Communication Infrastructure Fund managed by Rabobank, whose ideal is to create a national venture controlling all passive network elements in the Netherlands), the public (in an IPO) or a competitor (Vodafone certainly is a candidate, especially now that it is buying Kabel Deutschland).
All in all, it seems likely that AMXL will end up controlling KPN, including E-Plus. The question then is: will it separate the mobile and the fixed-line activities in the Netherlands? And what will then happen to the latter?
What will be the consequences for KPN Fixed? This will obviously depend on who ends up owning it.
- If KPN's Fixed and Mobile activities in the Netherlands are kept together, not much may change.
- If Fixed and Mobile are separated and KPN Fixed is sold, there will be competition between KPN Fixed and KPN Mobile/AMXL, as KPN Fixed may embrace a mobile strategy of some kind.
- KPN Fixed may increase network investments, which will be bad news for Ziggo and UPC.
Finally and in summary, here are the wild cards:
- Liberty Global may make a counter offer for E-Plus.
- Vodafone may buy KPN Fixed NL.