KPN third quarter sales flat, but profits up

30 Oct 2007

Dutch former monopoly operator KPN Telecom reported net profit of EUR355 million (USD510 million) in the third quarter to 30 September, up 4.7% from EUR339 million in the corresponding period of 2006, driven by higher profitability at its mobile division. Nonetheless, revenues flat-lined at EUR3.04 billion as higher sales of mobile, internet and TV-related products failed to offset a decline in sales from traditional voice call operations. Third quarter earnings before interest, tax, depreciation and amortisation (EBITDA) rose to EUR1.22 billion from EUR1.2 billion a year earlier, matching an average forecast of EUR1.22 billion in a Reuters poll of 15 analysts. The telco repeated its full-year outlook of flat revenue and EBITDA and free cash flow of more than EUR2 billion (USD2.9 billion). KPN chief executive officer Ad Scheepbouwer said the results were ‘in line with management guidance’.

KPN’s German mobile unit E-Plus was a key performer. The operator’s operating profits rose nearly 80% to EUR134 million following a restructuring. KPN said E-Plus reported an EBITDA margin of 37.6%, down from 39.8% in the second quarter but higher than the previous year’s 32.6%. E-Plus’s service revenues climbed 2.9% to EUR735 million, accelerating from 2.5% growth in the second quarter. Scheepbouwer said E-Plus and KPN itself were still ‘very much undervalued’, adding ‘E-Plus in Germany – people continue to assume that this will only develop at a slow pace, and every quarter … it develops at a faster pace.’

Netherlands, E-Plus Group, KPN