KPN exit signals change of strategy

The decision of KPN, the Dutch telecoms operator, to dispose of its stake in Eircom was seen as a surprise change of strategy by analysts and commentators in the Netherlands.

"The stake in Eircom was one of the ways to enter the UK market, so by selling it, it is clearly a change in strategy," KPN spokesman Mr Ernst Moeksis said.

Analysts in the Netherlands expressed surprise at the move, as Eircom had been seen as a bridgehead for KPN into the British market.

"It does appear to be a step back. It draws into question their commitment when they enter a strategic alliance," said Mr Stephen Heaps, an analyst at Merrill Lynch.

KPN said the key issue was "effective management control" at Eircom. This was "not provided by the current investment" in the Irish firm.

"We're not allowed to buy a bigger share than 30 per cent. If we did, we would have been obliged to make a full-scale bid, which would have been a bit too big for KPN," said Mr Moeksis.

KPN said there was no suggestion that it was unhappy with Eircom's management.

KPN has signalled that it wants to focus on its data networks business and its interests in eastern Europe, where it has substantial investments in Bulgaria, Hungary, the Ukraine and the Czech Republic.

Analysts in the Netherlands said that KPN may now be planing to increase the company's focus. However the cash raised from the sale would only give KPN limited scope to buy something else and, they said, the Dutch company itself could quickly become a merger or takeover target.