KPN declares end to interest in MMO

KPN yesterday moved to draw a line under its failed takeover attempt for MMO, saying there were no plans for further talks and no plans to mount a hostile bid for the UK mobile phone operator.

"The logic of the combination is obvious, but logical things do not always happen," said Mr Ad Scheepbouwer, chief executive of the Dutch telecommunications operator.

However, KPN reiterated its desire to expand beyond its heartland of the Netherlands, Belgium and Germany. The company said it felt it was essential to expand into at least one other large European market, such as the UK, France, Spain or Italy. "We still want to grow into a larger mobile player," Mr Scheepbouwer said.

He added that the company had been in talks with a number of other companies besides MMO, but indicated that no serious talks were under way. MMO shares rose 16.62 per cent to close at 103p in London.

KPN declined to comment in detail about the offer for MMO for reasons of confidentiality. However, it said that the acquisition would have been made mostly in shares. Any acquisitions would be made on this basis and would be subject to shareholder approval. KPN added that it was comfortable with its current credit rating and would not make an acquisition if it would jeopardise the rating.

The comments about MMO and its acquisition strategy overshadowed the announcement of KPN's full-year results, which saw the company return to profit and announce plans to return money to shareholders.

For 2003, the company is proposing to increase its dividend by an extra €0.13, on top of the €0.12 announced earlier in the year. KPN also said it would reinstate an interim dividend this year, for the first time since 2000. It would also consider launching a share buy-back. "In managing its balance sheet, KPN has no intention to hold unutilised surplus cash balances," the company said yesterday.

The new dividend policy came as KPN reported a net profit of €2.73 billion for 2003, compared with a €9.54 billion loss in 2002. The 2003 figures were boosted by a €1.08 billion tax gain from the restructuring of KPN's German unit, E-Plus, while the 2002 results were affected by hefty impairment charges for the company's 3G investments. Stripping out exceptional items, net profits were €655 million compared with a loss of €163 million last year.

Revenues for the year were €12.2 billion, up 0.3 per cent from 2002.