KPN is to sell its BASE mobile subsidiary to Telenet after agreeing a €1.3 billion deal with the Belgian cableco.

The Dutch operator revealed earlier this month that it had received a number of offers for BASE, widely reported as being Telenet and Voo.

BASE, Belgium’s third largest mobile operator, saw sales decline 2.3 percent last year to €711 million, while EBITDA was down 22 percent to €149 million.

It joins up with Telenet, which has 900,000 existing mobile customers through an MVNO, as it looks to increase competition with incumbent Belgacom.

Telenet, which has 2.1 million customers in total, saw revenues rise four percent last year to €1.8 billion.

The Liberty Global-owned company promised to spend €240 million on integration costs and upgrading BASE’s network.

Cost savings as a result of the deal were forecast to be around €150 million per year.

The deal will be paid for by €1 billion in new debt.

Telenet CEO John Porter said: "We are very pleased with this important strategic and complementary acquisition and the benefits that it will deliver to all stakeholders, including an enhanced customer experience for both our and BASE Company's mobile subscribers, resulting in an improved long-term growth profile for the combined company.

“Through the acquisition of BASE Company we have made a significant step to secure long-term mobile access conditions, ensuring we are well positioned to effectively compete for the future growth opportunity of mobile data."

KPN has been trying to offload BASE for a number of years. It aborted a deal in 2012 after receiving a number of offers that did not meet its valuation.

Rick Mattila, Telecoms & Industrials analyst at the securities business of MUFG, said KPN had achieved a “stellar” price for the sale.

The Dutch operator also retains a majority interest in any net proceeds of an existing claim it has against Belgacom.

It said it would outline what it intends to do with the transaction proceeds once the deal is completed.

The deal is subject to the usual regulatory approval.

KPN Chief Executive Eelco Blok commented: “We are pleased to have reached an agreement with Telenet on the sale of BASE Company.

“Over the years, BASE Company has been very successful as a Challenger in the Belgian mobile market.

“This transaction not only shows our commitment to realize an attractive return for our shareholders, but also positively contributes to BASE Company’s market positioning.

“We are strong believers in convergence and are delivering very good results with our fixed-mobile product offerings in The Netherlands, with customer base growth and increasing customer satisfaction.

“Our continued good progress is expected to result in a stabilized adjusted EBITDA by end-2015, a growing free cash flow and a growing dividend.”

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