Dutch phone firm KPN said it is in talks with British Telecom about sharing the cost of building third generation mobile phone infrastructure in the Netherlands.

"We are in talks with several parties on (3G) cost sharing in the Netherlands," including BT, said KPN spokesman Marinus Potman. He declined to give any further details.

KPN's share prices has plunged over 90% since its March 2000 peak as investors have queried its ability to cope with debts of 22.8bn euros (�14.1bn) built up to fund third-generation telephone licences and other acquisitions over the last two years.

BT meanwhile is preparing to spin off its mobile division through a flotation on the London Stock Exchange later this year as part of efforts to restructure the group and its debts.

Big savings

For much of this year, BT has struggled to convince investors and telecoms analysts it could bring its debt burden under control.

A deal to enable BT Wireless - being rebranded as mmo2 - to share costs with KPN Mobile could generate savings of almost �1bn (1.6bn euros), the Sunday Business newspaper reported.

Mr Potman estimated the potential savings as being "in the range of 20% to 40% of investments depending on the kind of co-operation".

Not enough?

KPN recently unveiled 4,800 job cuts, 10% of its workforce, to free up 700m euros (�438m) for its debt-cutting strategy.

The layoffs were not enough to convince analysts, who still expect the Dutch firm may have to sell its German-based mobile phone subsidiary E-plus.