Telecom group KPN has been downgraded by ratings agency Fitch from BBB to BBB- following the former state-owned company’s decision to spend €1.35bn on super-fast internet frequencies.
KPN’s share of the €3.8bn bill for the new 4G frequencies is €1bn higher than Fitch had forecast, the company said in a statement.
Investors have also punished KPN for its decision. The shares fell sharply in early trading after KPN said it would forgo a dividend this year and reduce 2013’s to pay for the 4G services.
Other analysts also said KPN had paid far more than expected for the frequencies.
KPN, Vodafone, T-Mobile and Tele-2 all won 17-year licences to operate the new services on Friday. Tele2 is a new player and will be able to roll out its own network.
‘The addition of Tele-2 and the extra frequency space which is now available will give an important impulse to innovation and competition on the mobile phone market,’ economic affairs minister Henk Kamp said in a statement on Friday.
The money will go to the treasury and will not be spent on new policies, Kamp said.
Cable companies Ziggo and UPC dropped out of the auction, saying the prices were too high. Ziggo, listed on the Amsterdam stock exchange earlier this year, gained some 2%.
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