After failing in its attempts to sell Base (Belgium) and E-Plus (Germany), KPN appears to be focusing more on partnerships. The Dutch operator has managed to hold off America Movil's influence, but is discussing synergies with the new shareholder. Telekom Austria, in which America Movil also recently acquired a stake, is reportedly also involved in the talks. KPN also recently announced alliances with Tech Mahindra for IT development (both for its own use and for customers) and with Interaxi to develop RFID services. The most recent partnership is with RoutIT, in which KPN is acquiring a 12.5 percent stake.
RoutIT is a wholesale player that buys connectivity from operators such as KPN, Tele2 and Eurofiber. Its sales force is made up of a great number of partners that focus on the SME market (up to 20 employees). Assuming RoutIT remains independent and does not change its sales strategy, the benefit for KPN will be mainly from taking a stake in the company. This adds to profit and prevents a rival such as Vodafone from working with RoutIT. It's not known whether options were also agreed for an eventual full takeover of the company, but this seems a likely scenario.
KPN still has a balance sheet problem (net debt at 2.6 times EBITDA, higher than its target of 2.0-2.5). The mobile market remains a problem (see our article 'KPN in Q2: turnaround nearing in broadband, not yet in mobile') and is taking a lot of the company's focus. The enterprise segment is also not free of problems, as the recent performance at BT Global Services (where the CEO was just replaced) shows. This is why the company is investing a lot at the moment in infrastructure, service propositions and quality. Partnerships and takeovers add to this. All in all, no one can say KPN is resting on its laurels.
