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Liberty Global's Telenet to buy KPN's Belgian unit for €1.3 billion

Telenet's CEO John Porter
Telenet's CEO John Porter

Cable telecoms company Liberty Global's Belgian subsidiary Telenet has agreed to buy local mobile network operator Base from Dutch group for €1.325 billion. 

For Liberty Global, Europe's biggest cable operator, the acquisition marks a departure from strategy.

It had said in the past that it was not interested in buying or building its own mobile phone networks instead of renting capacity from rivals as a mobile virtual network operator (MVNO). 

However, the deal will create a much stronger operator in Belgium's mobile market as fixed and mobile telecom services converge.

The combined company is estimated at having sales of €2.4 billion and adjusted operating earnings of €1.1 billion, Telenet said. 

"We fully support Telenet's acquisition of Base, which represents a cost-effective and unique opportunity to expand Telenet's mobile and fixed business in Belgium," Mike Fries, chief executive of Liberty Global, said. 

"Elsewhere in Europe we will continue to focus primarily on our existing MVNO arrangements and rapidly developing WiFi networks to provide seamless mobile voice and data services to our customers," he added. 

Liberty owns 56.67% of Telenet, according to Thomson Reuters data. 

As a result of taking over Base's network, Telenet will no longer need to buy wholesale capacity from Belgium's second-largest network operator, Mobistar, which is 52.91% owned by France's Orange. Analysts estimate that its business with Telenet accounts for some 20% of Mobistar's core profits. 

Conversely Mobistar does not have its own fixed line network to offer residential broadband or telephony and has pressed for the Belgian regulator to open up Telenet's network to wholesale access. 

Telenet has been one of the winners of a 2012 law that limited the maximum duration of Belgian telecoms service contracts to six months. That led many mobile users to switch operators, causing prices to tumble. 

The group, which is mainly active in the Dutch-speaking north of the country, has about 900,000 mobile subscribers, while Base has 3.3 million. 

Analysts expect the merger of Telenet and Base to reduce competition in the Belgian market and create two similar sized mobile players, Telenet and Mobistar, behind market leader Proximus. 

Telenet said it expected annual savings of around €150m as a result of the deal and would invest €240m to upgrade Base's network. 

For KPN, which last year sold its German subsidiary E-Plus to Telefonica Deutschland, the sale of the Belgian unit marks a complete retrenchment from foreign consumer markets. It still sells wholesale access internationally. 

KPN said the Base deal was secured with a €100m break-up fee but was still subject to regulatory approvals.