KPN Telecom, bruised after its partner Hutchison Whampoa quit its German third generation UMTS mobile phone consortium last week, failed to convince investors yesterday that it is capable of funding its ambitious mobile expansion plans.
The company, which is a 21 per cent shareholder in Eircom and is to sell its shareholding in the Irish company as part of a move to fund its expansion plans, has found its share price under some pressure recently.
Analysts are now questioning KPN's broader partnership with Hutchison after the Hong Kong conglomerate withdrew from the E-Plus Hutchison group - a 5050 joint venture between Hutchison and KPN - shortly after it had won a licence costing €8.4 billion to build a third generation wireless network in Germany.
That, coupled with a 33 per cent downgrade in KPN's share price target by Morgan Stanley Dean Witter (MSDW) earlier yesterday, pushed its shares to a new year-low of €30.
KPN tried to reassure analysts at a conference call late on Monday and held a press briefing on yesterday morning to say that it had its financial house in order and that Hutchison's exit had always been possible under their venture agreement.
KPN said it was in talks with the government to discuss the possibility of limiting the state's secondary offer of KPN shares, which would make its new share sale more successful.
