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KPN to sell stake in Infonet

The Dutch telecommunications giant plans to hock its 17 percent stake in the network services concern and other "non-core assets" to reduce its debt.

Dutch telecommunications giant KPN said Monday that it will sell its stake in Infonet Services to raise cash.

The company said it plans to hock its 17 percent stake in the network services concern and other "non-core assets" to reduce its debt.

Infonet announced last week that some of its stakeholders expressed interest in selling their ownership, and the company enlisted UBS Warburg and Merrill Lynch to help explore its options.

Infonet offers data transmission services to 2,600 large corporations in about 180 countries. Six European-based telecommunications juggernauts, KDD, Swisscom, Telefonica, Telia, Telstra and KPN, own about 88 percent of the El Segundo, Calif.-based company.

The company has convinced its shareholders to sell their stakes as one large block, according to Goldman Sachs analyst Frank Governali, which makes it easier for another telecom company to come and scoop up the stake and possibly take control of the company.

"We believe that Infonet is a very good fit with any telco looking to move up the global communications food chain," wrote Governali in a research report, adding that Infonet would offer an aspiring telecom company a beachhead in the international telecommunications market.

The Netherlands-based KPN said its "interest bearing" debt zoomed to $19.6 billion (21.9 billion euros) at the end of 2000 from $4.1 billion in 1999.

Yet buyers may be scared as other international telecommunications players waver under a heavy debt load partially from spending enormous amounts on wireless licenses.

Despite the sale of 15 percent of its mobile unit to NTT DoCoMo, which raised $3.58 billion, KPN shelled out $7.78 billion for licenses to offer faster wireless service during the year, which put the company further into a hole. The company has spent a total of $13.4 billion to upgrade its wireless network so far.

KPN lost about $660 million in 2000, excluding one-time items, compared with a profit of $690 million during the previous year.

Along with the sale of its share in Infonet, KPN said that it will sell its stakes in nine other companies including its 51 percent share of Euroweb, an Internet company focused on Central and Eastern Europe. KPN hopes to raise $4.72 billion from the asset sale.