KPN calls for mmO2 tie-up in Germany

DUTCH telecoms group KPN attempted to kick-start talks with struggling rival mmO2 to merge their German networks. KPN has made no secret of its desire to expand its German arm e-plus - which, like mmO2, struggles to compete with the dominant Vodafone and T-Mobile.

Although the two are not in talks, KPN's identification of mmO2 puts pressure on chief executive Peter Erskine to come to the negotiating table. KPN said: 'We want to strengthen our position in Germany, either by organic growth or by an acquisition. That would be O2.'

The City has long argued that the combined 12m customers would be a credible challenge to the two giants with 22m apiece.

A sale would staunch mmO2's German losses - £20m a month in the first half of last year - and boost the shares, up 1 1/4p at 46p. The UK firm said: 'We continue to review options.'

It strengthened its board, where chairman David Varney is going part time. Marketing head Kent Thexton, UK chief Dave McGlade and German boss Rudi Groger join full-time. Severn Trent chairman David Arculus joins as a part-time director.