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Telefonica Mulling KPN Takeover Bid

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The wave of European telco consolidation continued today with reports that Spain's Telefonica is considering a bid for the Dutch KPN Group. The German language Financial Times Deutschland reported that Telefonica had been mulling its options and had begun working out the financial viability of a takeover and the potential cost savings it could engender.

The two companies are not talking and Telefonica had not drawn up an offer, the newspaper said. Telefonica declined to comment on media speculation.

Rumours of a talks originally surfaced in January this year, although these were denied by KPN Chairman, Cesar Alierta.

France Telecom is currently understood to be mulling a $54 billion bid for the Nordic based TeliaSonera group. KPN has a stock market valuation of around USD35 billion, with USD17 billion of debt.

Both Telefonica and KPN own separate mobile operators in Germany, however it is unlikely that a disposal would be required as their combined market share would simply bring them in line with Vodafone and T-Mobile. According to figures from the Mobile World analysts, a combined E-Plus/O2 would have a market share of around 28.5%, compared to T-Mobile's 38.8% and Vodafone's 32.7%

Both operators own 3G licenses in Germany though, and one of them would have to be surrendered back to the regulator.

In 2000, a planned merger between Telefonica and KPN was cancelled following shareholder concerns about the size of the Dutch government's stake in the merged company. Rumours of talks resurfaced in 2005 and were denied.

On the web: Financial Times Deutschland - Mobile World

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