KPN reaffirms commitment to FTTH

9 Nov 2011

Dutch operator KPN (or Royal KPN as it is also known) has announced details of a three-step plan designed to bolster its deployment of fibre-to-the-home (FTTH) technology, under the remit of its ‘Strengthen – Simplify – Grow’ strategy. In a press release published today, the telco says that as part of a first and second step, it intends ‘to acquire four fibre service providers currently owned by Reggefiber and Reggeborgh and also intends to acquire Reggefiber’s wholesale operator’. As a third step, KPN has announced ‘an amendment to the Reggefiber joint-venture agreement with Reggeborgh, designed to provide a clear roadmap toward ultimate control for KPN’.

To this end, KPN confirms it has reached agreement on the terms to acquire fibre service providers Edutel, XMS, and Concepts ICT from Reggeborgh, and Lijbrandt from Reggefiber. Together, these service providers deliver TV, broadband and telephony services to around 110,000 customers over Reggefiber’s FTTH network. The acquisitions will increase KPN’s presence in the Dutch FTTH market and will allow for ‘a unified approach in existing and future FTTH areas’. Further, KPN has also reached agreement concerning a plan to purchase Reggefiber Wholesale (the smaller operator’s wholesale unit), allowing Reggefiber to focus solely on the rollout of FTTH and to operate an open access passive FTTH network. The completion of the above mentioned acquisitions is subject to approval by the Dutch competition authority (NMa).

KPN says the moves being taken form a key part of its ongoing strategy to improve its broadband market share: KPN is targeting a >45% share of the segment by 2015. It hopes to reach this goal by foregrounding two key pillars for growth: 1) improving and differentiating the TV and broadband propositions; and 2) expanding the addressable market with a hybrid VDSL and FTTH network strategy. ’Today’s announcement forms an integral part of our wireline strategy. KPN believes that FTTH is an important long-term technology and provides regional strength in the medium-term. We see good results in the fibre areas with increasing broadband and TV market shares and we will continue to roll out FTTH in promising areas via the Reggefiber joint-venture,’ said Eelco Blok, CEO KPN.

KPN has held a minority 41% stake in Reggefiber since December 2008, with Reggeborgh holding the remainder of the shares. In the newly amended structure, KPN holds options to increase its ownership to 60% based on a pre- defined timeline alongside operational milestones. The option exercise prices are based on a fixed price structure. At the end of September 2011 Reggefiber had connected 687,000 homes, out of 844,000 homes passed. For a detailed explanation of the joint-venture agreement reference is made to the ‘Reggefiber joint-venture paper’ published on KPN’s website: http://www.kpn.com/ir_ftth

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