KPN to use Telecom to target British market

Dutch telecoms group KPN said yesterday that it would use its shareholding in Telecom Eireann as a base to introduce services in Britain. The company has a 12 per cent shareholding in Telecom, but, as part of a shareholders' agreement, is set to increase this before Telecom floats in June.

"Telecom Eireann already has 80 per cent of the telephone traffic to London, so we will have an easy entrance," Mr Wim Dik, KPN's chief executive said. "It's only logical that we move into the British market," he added, but declined to specify a timeframe.

KPN and Telia, the Swedish telecoms group, together have a 20 per cent stake in Telecom and this is set to increase to 35 per cent. However, Telia is involved in a merger with Telenor, the Norwegian telecoms company that is also a 45 per cent shareholder in Esat Digifone, the second-biggest Irish mobile phone operator.

There is growing speculation that Telenor, which has explored plans to use the Bord Gais network to provide fixed line services, will sell its Telecom Eireann stake because of possible conflicts of interest. Being a shareholder in both Telecom Eireann and Esat Digifone is not seen as feasible for the company, according to analysts.

Mr Dik said KPN was keen to increase its stake in Telecom Eireann, with or without the involvement of Telia. It is now thought likely that KPN will buy Telia's stake prior to the flotation in June, when up to 35 per cent of Telecom is offered for sale.

Until now, KPN had not targeted the British market, leaving it to US long-distance carrier AT&T, to which it was linked through the Unisource partnership. However, AT&T is ending its involvement in Unisource.

KPN's new interest in Britain comes at a time when Telecom Eireann has announced plans to spend £60 million (€76.18 million) on targeting the Northern Ireland market. It is thought that Telecom Eireann will increasingly look to niche market opportunities in Britain.

Telecom is known to be keen to find investments abroad, to boost revenue streams. For its part, KPN said it was also keen to increase its presence in eastern European countries. It has interests in Hungary and has made a joint bid for BTYC in Bulgaria, with Greek telecoms company OTE.