THE SKEPTIC: KPN Should Act Fast, And Writedown UMTS DOW JONES NEWSWIRES (This story was originally published Friday) By Arent Jan Hesselink A DOW JONES NEWSWIRES COLUMN AMSTERDAM -- Maybe KPN NV (KPN ) is just in denial. After all, it's still carrying roughly EUR8 billion worth of third-generation cellular licenses on its balance sheet - a value everyone in the market knows it will have to write down. Everyone except KPN , that is. And more and more observers think KPN should take the pain as soon as possible, and pay the price for overplaying its 3G hand in the fat years, thus removing a remaining uncertainty overshadowing the company. Except KPN . The company has always said it will only start writing down licenses, if necessary, once it starts using them. And that won't be until well into 2003, or possibly towards the end of that year. That stance doesn't seem wise, because the circumstances now seem perfect for KPN to get away easily with a writedown, even if it leads to yet another staggering net loss. KPN , remember, posted the largest-ever loss by a Dutch company when it reported a EUR7.5 billion shortfall in 2001. That loss was caused by a writedown of yet another item acquired during KPN's royal spending spree late last century: German mobile unit E-Plus. Some market watchers thought KPN might write down the value of its UMTS licenses - in Germany, Belgium, The Netherlands and even the U.K. - at that time as well, but it didn't. KPN always said it chose not to because it didn't know how large the writedown should be, but company watchers said the real reason was something else entirely: had the company written down the value of the licenses then in its full-year report, on top of the EUR12 billion writedown for E-Plus, its equity would have turned negative. That won't be the case now, analysts say, because KPN's shareholder equity looks pretty healthy, at around EUR12 billion. Dutch companies that run into negative equity are punished by the Euronext Amsterdam bourse by being placed on a "penalty bench," which serves a warning to investors. This has in the past happened to Dutch communications high-flyers such as UPC (UPCOY) and Versatel (VRSA), both of which have been mostly deserted by investors. In addition, writing down the UMTS licenses at this stage wouldn't entail a loss of face: both Spain's Telefonica (TEF) and Finland's Sonera (SNRA) opened the door to this clubhouse earlier this week. Finally, if KPN doesn't write down the licenses soon, it might forced to do so by its accountant at the end of the year. If that happens, it could spur a controversy no company needs right now. KPN , however impressive its recent restructuring efforts were, remains a fragile company. In restoring investor confidence after its share price collapse to EUR5 from EUR75 since 2000, it's best not to leave uncertainties hanging over the company. And sooner, rather than later. -By A.J. Hesselink, Dow Jones Newswires; 31 20 626 0770; arentjan.hesselinkdowjones.com Updated July 29, 2002 2:05 a.m. EDT