Spectrum Costs Put KPN Recovery on Hold

Carlos Slim could do with a dose of Dutch courage. Shares in telecom operator Royal in which Slim's América Móvil holds a 28% stake, sank 14% after it paid a record-beating €1.35 billion ($1.78 billion) to secure fourth-generation mobile-phone spectrum in the Netherlands.

That is equivalent to one-fifth of KPN's already hammered stock-market value before the auction results were announced. A pickup in the shares looks further away than ever. The Dutch spectrum auction's results exceeded even the most aggressive expectations, raking in €3.8 billion compared with consensus forecasts for around €1.4 billion. KPN says a large contributor was the regulator's decision to reserve low-frequency spectrum for a new operator, which went to Sweden's Tele2 TEL2-B.SK 0.00% . That left three other bidders competing for two paired blocks of spectrum. KPN now faces the double hit of greater competition: Tele2 is known for aggressive pricing and has been in the Netherlands for 15 years. That should shoot down early hopes that KPN's shares—having halved from where Slim bought—might have hit rock bottom.