KPN reports 3% fall in 4Q12 sales; plans to issue EUR4bn in new shares to trim debt

5 Feb 2013

Dutch telecoms operator KPN Telecom (or Royal KPN) has reported a 3% fall in revenues for the fourth quarter of 2012 to EUR3.27 billion (USD4.44 billion), impacted by the economic slowdown an fierce competition in its home market, and immediately confirmed plans to raise EUR4 billion through a rights issue to trim debt that reached EUR12 billion at the end of last year. KPN Telecom booked full-year revenue of EUR12.71 billion in 2012, down 3.5% on the EUR13.16 billion figure reported a year earlier. Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at EUR4.53 billion for FY2012, down 12% on the EUR5.14 billion reported in FY2011, while fourth-quarter EBITDA slumped 15% to EUR1.12 billion. EBITDA margin for the full year was 35.6%, down from 39.0% in 2011, while the fourth-quarter margin slipped five percentage points on an annualised basis.

The Dutch carrier said that high finance costs and a EUR314 million impairment charge linked to its corporate market business resulted in a net loss of EUR160 million in 4Q12, compared to a net profit of EUR176 million in 4Q11, precipitating a 55% drop in full-year net profit to EUR693 million.

Commenting on the group’s latest results, its CEO Eelco Blok said: “In 2012 KPN continued to face a challenging environment. The adverse macro-economic conditions continued to weigh on consumer confidence and on the investment plans of our business customers. Moreover, competition intensified in our mobile markets. The financial performance of our businesses in 2012 was largely within the outlook ranges, though supported by asset disposals and somewhat below our expectations at the start of the year. Operationally, we have made good progress in executing our strategy by taking steps to stabilise our domestic market positions; however we have seen a slow-down in revenue growth in Germany.’

The chief executive went on to say that although KPN is experiencing lower underlying profitability in each of its three main markets (the Netherlands, Germany and Belgium), its business strategy and investment plans – specifically in fibre – are designed to help fuel growth in 2013 and beyond. ‘In order to execute our strategy and position KPN for future growth, we need to strengthen the balance sheet. In recent years, KPN’s financial position has been impacted by rising debt levels combined with increased commercial investments. The EUR4 billion rights issue announced today and our earlier announcements of a lower dividend outlook will support our financial position in the coming years,’ he said.

Netherlands, KPN