KPN Telecom said yesterday it planned to raise €4E6 billion (£3.15 to £7.6 billion) from a share and convertible bond issue to pay for its third generation mobile phone expansion plans.
This is less than half what the company initially said it would raise.
The company, which has a 21 per cent stake in Eircom and which last month sold $4.38 billion (€5.04 billion) of global bonds, said in July it planned the issue in the fourth quarter of this year.
"The size is about correct," KPN spokesman Mr Michel Hueber said, referring to an article in Dutch newspaper Financieele Dagblad which said the issue would take place by the end of November.
Mr Hueber declined further comment.
A series of telecoms firms, including Telecom Italia and Spain's Telefonica, are trying to raise cash mostly to pay for universal mobile telecommunications system (UMTS) licences and the roll-out of the network.
Banking sources said earlier that France Telecom was meeting its bankers to discuss a €5 billion add-on loan to its existing debt. Bankers say France Telecom will need substantial funds for a French UMTS licence.
UMTS allows mobile phone users to access the Internet or watch videos on their handheld devices.
"I don't get the impression it will be that hard for KPN to raise the money," Mr Peter Wortel, an analyst at Amstgeld, said.
"At its current share price, I think KPN is interesting for investors . . . the company has a lot of potential," he added.
Shares in KPN fell 2.66 per cent to €24.92, after the news broke, down in line with sector peers. European telecoms have seen their share prices fall this year with numerous auctions for the costly UMTS licences.
KPN's shares reached a record high at €75.63 on March 6th.
KPN Telecom plans an initial public offering (IPO) of its KPN Mobile unit that is 15 per cent owned by Japanese cell phone company NTT DoCoMo.
KPN Mobile owns a UMTS licence and mobile network in Germany through its recently acquired E-Plus, the third largest operator in Germany. It also plans to compete for a Belgian UMTS licence through KPN Orange.
KPN Telecom's issue targets institutional investors worldwide and at private investors in the Netherlands, Germany and the US.
