UPDATE 3-KPN eyes Germany for auction, Phone House clients

* KPN to enter German auction of mobile frequencies

* Says open to partnerships after auction

* KPN plans to acquire German clients on E-Plus network

* KPN shares down 0.6 pct after results

(Adds KPN comment, updates shares)

AMSTERDAM/DUESSELDORF, Jan 26 (BestGrowthStock) – KPN (KPN.AS: ) will
enter a German auction for mobile phone frequencies and may buy
mobile clients from The Phone House to cement its base in
Europe’s biggest market, the Dutch group said on Tuesday.

But its investment appetite has been tempered by the scars
it bears from one of the most expensive telcoms auctions a
decade ago.

Chief Executive Ad Scheepbouwer said KPN would likely bid
for 800 mhz frequencies or others in the German auction
scheduled for April 21.

Chief Financial Officer Carla Smits-Nusteling said KPN had
set itself a maximum bid price but declined to give details.

“It is no use in getting the licences at all costs,” she
said, adding KPN’s plans for a 1 billion euro ($1.4 billion)
share buyback was a sign that for KPN “it is business as usual
and by no means will we go crazy on the auction”.

Although parties are not allowed to submit offers jointly
KPN will be open to partnerships after the frequencies are
obtained, KPN Mobile International executive Eelco Blok told
analysts, without naming any potential partner.

“We are open to partnerships to share our networks with
other parties after the auction,” Blok said.

Prices had skyrocketed during the previous auction in 2000.

At the time, six top telecoms players spent 51 billion euros
on licences for 3G mobile telephony in Germany, but only four
incumbent mobile operators were able to carry out their plans
amid a crash in telecoms shares in 2002.

E-Plus had formed a consortium with Hutchison Whampoa
(0013.HK: ) and paid 8.36 billion euros for two frequency blocks.
KPN Mobile then bought Hutchison’s interest in the E-Plus
Hutchison consortium.

This time the sale, which will also include additional UMTS
licences, is estimated to generate up to 5 billion euros in
proceeds for Germany’s stretched federal budget.

Germany’s telecom regulator said last week it had received
six requests to take part in the country’s biggest digital
frequency auction.

It has not named the potential bidders but Deutsche Telekom
(DTEGn.DE: ), Vodafone (VOD.L: ) and Telefonica’s (TEF.MC: ) O2
Germany are expected to be among the applicants apart from KPN’s
German unit E-Plus.

The auction centres on licences for spectrum that will be
freed up in the switchover from analogue to digital terrestrial
television — also known as the digital dividend — and will
help speed the rollout of broadband communications.

KPN is also looking into buying mobile phone customers in
Germany from The Phone House, owned by a joint venture between
Britain’s Carphone Warehouse (CPW.L: ) and U.S.-based Best Buy Co
Inc (BBY.N: ).

A KPN spokesman said it would only purchase clients which
are already on its E-Plus network. He could not say how many The
Phone House clients were on E-Plus’ network “but I would be
surprised if it were more than a million”.

Shares of KPN, which also reported fourth-quarter earnings
and said it would buy back 1 billion euros in shares this year,
were down 0.6 percent by 1455 GMT, slightly underperforming the
DJ Stoxx European telecoms index (.SXKP: ). [ID:nLDE60P06Z]
($1=.7097 Euro)

Stock Today
(Reporting by Harro ten Wolde in Amsterdam, Nicola Leske in
Munich and Matthias Inverardi in Duesseldorf; Writing by Michael
Shields)

UPDATE 3-KPN eyes Germany for auction, Phone House clients