KPN saw its share price slip by 7% to EUR6.12 yesterday after it issued a warning that its pre-tax profits for 2004 would be lower than those expected for 2003. The Dutch telco recently raised forecasts for 2003 in a move which the market interpreted as a sign of the company’s recovery from its high debt burden. However, while KPN predicts pre-tax profits of EUR1.5 billion for this year, it confounded industry watchers by saying the figure for 2004 would dip to EUR1.4 billion before recovering in 2005 to over EUR1.5 billion. The PTO caused further confusion, saying that its initial projections were ‘conservative’ and that 2004 pre-tax profits could still reach EUR1.7 billion, rising to EUR1.8 billion the year after. KPN anticipates that sales will flat-line in 2003, remain at zero growth or maybe even fall by 2% in 2004 and be flat in 2005 too. Mobile sales are expected to slow to between 5% to 7% in 2004, while fixed line revenues will decline by up to 7% in the coming year and 3%-5% in 2005. The operator blames the situation on a cut in charges from fixed to mobile phones ordered earlier this month by the country’s industry watchdog Opta.