* KPN will rent back use of towers
* KPN's debt to core profit ratio stood at 2.7 in Q3
* Analysts expect further dividend cut
* Shares fall 4 percent in Thursday trading
AMSTERDAM/BRUSSELS, Nov 15 Dutch telecoms group
KPN, stepping up its battle to keep debt under control,
on Thursday agreed to sell some of its German mobile towers for
393 million euros ($500 million).
The group, hit by changes in customers' mobile habits and
Europe's lacklustre economy, breached its debt targets in the
second quarter and had already cut its 2012 dividend.
The deal with U.S. group American Tower Corp, which
will lead to a book gain of 100 million euros, comes on top of a
decision in late October to sell its Dutch mobile phone towers
for a book profit of 66 million euros.
The group has said it does not need to own such towers,
which support its own network as well as competitors', and will
rent access from the new owners.
KPN's net debt to EBITDA (core profit) ratio, which it aims
to keep between 2.0 and 2.5, stood at 2.7 at the end of the
Ratings agency Moody's has a negative outlook on KPN's Baa2
debt rating, which is still an investment grade level.
On Wednesday, KPN's CEO told investors he would be willing
to accept a lower credit rating if it meant the group could
continue investing, a departure from its earlier position when
it said it was committed to keeping its credit ratings.
The shares of KPN, in which Mexico's America Movil
holds a 27.5 percent stake, were 4 percent lower on Thursday,
having already more than halved in 2012 and reaching 10-year
The group is likely to need some of the funds from the sale
for an ongoing spectrum auction in the Netherlands, leading some
analysts to expect further cuts in shareholder payouts.
Robin Bienenstock at Sanford Bernstein, who on Thursday
downgraded the shares to "underperform" from "market-perform",
told his clients that even with the tower sale and a further
dividend cut, KPN was likely to remain above its debt targets.
"If anything consensus EBITDA estimates will have to come
down for 2013 as incremental lease costs will need to be
factored in," she wrote.
The sale was reported by Reuters on Nov. 6.