AMSTERDAM, June 7 (Reuters) - Dutch KPN Telecom on Thursday dismissed as speculation a newspaper report it was considering selling its KPN Mobile unit or its fixed line business but repeated it was mulling all options to help cut its 23.2 billion euros ($19.66 billion) debt pile. "This (a mobile sale) is not under discussion at the moment,'' KPN spokesman Bram Oudshoorn said. "We are looking at all possibilities to enhance KPN's position... and one can think of lots of different options.''
Dutch paper Financieele Dagblad, referring to unidentified sources, said a planned sale of KPN Mobile would require separation of the mobile unit from the fixed line business and would happen before a potential rights issue by KPN Telecom.
Traders said investors were unimpressed by the latest report and KPN shares, which had risen to as high as 8.05 euros in earlier trade, were down 1.3 percent at 7.67 euros at 0935 GMT. The shares have shed some 30 percent in about a week to reach five year lows at 7.25 euros on Wednesday, on continued speculation that KPN will launch a 5.5 billion euros rights issue. This would be Europe's second largest after British Telecom's (BT) recent cash call of 5.9 billion pounds.
Analysts said KPN needed to develop some concrete reorganisation plans if it wanted shareholders to take up a big rights issue -- one of the options KPN said last Friday it was looking at to restructure its balance sheet.
"The company needs to have a very strong story if they want to do a rights issue,'' Rabo Securities analyst Arjan Dorrestijn said, adding shareholders would not be willing to put more money into a status quo situation.
KPN's debt pile mounted when it bought a 77.5 percent stake in Germany's third largest mobile operator E-Plus and third generation mobile phone licences in Germany, Britain, the Netherlands and Belgium. So far, KPN has failed to cut its debt and Chief Financial Officer Maarten Henderson said last Friday that given market circumstances, it may be difficult to get the five billion euros it targeted initially from sales of assets.
DEMERGER ALONG THE PATH OF BT WIRELESS
An outright sale of KPN Mobile would be more difficult, some analysts said, partly because of its debt situation and because most telecoms companies are looking to keep costs in check rather than buying peers, following their multi-billion dollar spending spree on third generation mobile phones.
"Clearly it (a sale) is an option but I sense it will only come in to play when the situation turns very problematic,'' a London-based analyst said. Rather than an initial public offering (IPO) of KPN Mobile, he expected KPN to follow the same demerger route taken by BT whose shareholders will receive a stake in BT as well as in its mobile unit BT Wireless by the end of this year.
Last month, Dresdner Kleinwort Wasserstein put a 17.3 billion euro valuation on 85 percent of KPN Mobile, which is 15 percent-owned by Japan's mobile operator NTT DoCoMo. It said KPN needed to raise about eight billion euros from equity shareholders over the next two years to cut debt to a "comfortable level.''
The sale of the fixed line business has been discussed between KPN, the government -- which owns a 34.7 percent stake in KPN -- and financial institutions, Financieele Dagblad reported, adding Spain's Telefonica or Telecom Italia were possibly interested in buying part of KPN Mobile. Both companies have regularly popped up as possible partners for KPN, which has said it is prepared to sacrifice its independence.
Telecom Italia Mobile has said it is not interested in extending its cooperation with KPN, other than their alliance with NTT DoCoMo to offer speedy Internet services over mobile phones in Europe. In May last year, KPN cancelled merger talks with Telefonica.
Telefonica Moviles, Telefonica's mobile unit, has been linked to BT Wireless, but last week
