KPN issues profit warning; plans to cut 5,000 jobs by 2015

21 Apr 2011

The Netherlands’ largest telecoms group by subscribers and revenues, KPN Telecom (or Royal KPN as it is also known), has said it may not meet its financial targets in fiscal 2011 and warned that it is looking to cut 5,000 jobs by 2015. The Associated Press writes that KPN is concerned that amid a rapid rise in the availability of smartphones in the country, customers are using fewer SMS text messages and opting for cheaper VoIP telephony services over its traditional PSTN-based services. Further, it warned today that its business customer margins are also being adversely impacted by price competition.

Royal KPN has trimmed its expectation of operating earnings before interest, tax, depreciation and amortisation (EBITDA), from EUR5.48 billion (USD7.95 billion) to less than EUR5.30 billion for FY2011. The group’s outlook however, excludes restructuring costs of between EUR250 million and EUR300 million to axe 4,000 to 5,000 jobs between 2011 and 2015. On a more positive note, the Dutch telco says its mobile business in Germany, E-Plus, is not affected. The German mobile arm is the third largest player in the market according to TeleGeography’s GlobalComms Database, with 20.427 million connections as at 31 December 2010, a market share of 18.8%.

KPN’s recently appointed chief executive officer Eelco Blok confirmed his firm is facing ‘negative trends in the Netherlands’, adding that he has decided to accelerate investments related to his new strategy, which he will update on 10 May 2011, in an attempt to make the Dutch business more robust. KPN booked revenue of EUR3.24 billion in the first three months of this year, down 1.3% year-on-year, while EBITDA declined 4.1% to EUR1.27 billion. However, net profit rose to EUR591 million from EUR449 million a year ago, boosted by a one-off tax benefit of EUR150 million.

Netherlands, KPN