Telefonica: Hasn't Approached KPN Over Possible Bid

Telefonica spokesman Miguel Angel Garzon said the company hasn't had any contact with KPN's management.

Earlier Monday The Wall Street Journal newspaper cited people familiar with the situation as saying Telefonica has approached KPN about acquiring the operator for about EUR20 billion.

The report said Telefonica executives have directly contacted their counterparts at KPN about beginning talks, and both companies were assembling teams of advisers as a first stage in preparing for negotiations. It noted the process was at an early stage, saying it wasn't clear how KPN had responded to Telefonica's advance.

Telefonica's Garzon said the company has a policy of not commenting on market speculation related to its merger-and-acquisition plans.

Telefonica has been active this year on the mergers-and-acquisitions front, spending EUR3.6 billion to acquire a 69.4% stake in Czech phone company Cesky Telecom AS (BAATELEC.PR).

Following concern from both investors and analysts over any imminent move away from its focus on expansion in Latin American markets, Telefonica pledged a cautious approach after its Cesky Telecom purchase.

The Cesky Telecom acquisition was Telefonica's first in Europe since buying mobile-telephony licenses in Germany, Italy and Switzerland in 2000 and 2001. Telefonica eventually had to write off large parts of those investments.

KPN has declined to comment on the WSJ report, but the Dutch government has denied receiving any approach from Telefonica. The Dutch state holds a 14.2% stake in KPN and has a so-called golden share.

At 0705 GMT, Telefonica shares were down 2 cents at EUR13.62.

Company Web site: http://www.telefonica.com

-By David Roman, Dow Jones Newswires; 34 913958125; david.roman@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 3rd October 2005