KPN intends to buy the four fibre service providers currently owned by Reggefiber and Reggeborgh as well as Reggefiber’s wholesale operator. The operator has also introduced an amendment to the Reggefiber joint venture with Reggeborgh that will shift ultimate control to KPN. The move is part of KPN’s “Strengthen – Simplify – Grow” strategy and will help further its goal of having a broadband market share of at least 45 percent by 2015. The acquisitions still need regulatory clearance.
The operator will take over Edutel, XMS and Concepts ICT from Reggeborgh, and Lijbrandt from Reggefiber. Together, these service providers deliver TV, broadband and telephony services to 110,000 customers over Reggefiber’s FTTH network. KPN has also reached agreement on the terms to acquire Reggefiber Wholesale (Reggefiber’s wholesale operator). This will allow Reggefiber to focus solely on the roll-out of FTTH and to operate an open access passive FTTH network.
Under the terms of the deal, KPN will hike its stake in Reggefiber to 60 percent from its current 41 percent, with Reggeborgh holding the remaining shares. The transaction will take place in two steps. There will first be a call/put option for an additional 10 percent for EUR 99 million, as soon as 1 million homes are connected at Reggefiber or by 31 December 2012. The remaining 9 percent will be bought as soon as 1.5 million homes are connected at Reggefiber or by 1 January 2014. The exercise price here will range at EUR 116-161 million, depending on the level of capex efficiency reached at Reggefiber.
KPN expects to consolidate Reggefiber in its financial statements after vesting of the second option and approval by Dutch competition watchdog NMa. Reggeborgh retains the option to sell its 40 percent stake for EUR 647 million, but only three and a half years after the second option has been exercised. Based on the current anticipated roll-out plan, KPN expects that this option will not be exercised before 1 July 2017. Alternatively, this option can also be exercised at fair value for a period of seven years after the second option is exercised.
Reggefiber’s rollout plans will not change as a result of the acquisitions. Reggefiber wants to cover more than 20 percent of Dutch households in 2013. At the end of the third quarter, the operator had 844,000 homes passed, 687,000 homes connected and 240,000 homes activated.
