KPN reports sharp fall in revenue, profit in Q1; scraps dividend for 2013/14

23 Apr 2013

Dutch telecoms group KPN Telecom (or Royal KPN as it is also known) has released a disappointing set of financials for its first quarter ending 31 March 2013, and confirmed it will not be paying a dividend for 2013 and 2014. The carrier said revenues for the period under review fell by 8.8% year-on-year to EUR2.911 billion (USD3.801 billion) from EUR3.191 billion, EBITDA dipped 12% to EUR994 million from EUR1.131 billion and net income (attributable to equity holders) slumped to EUR138 million from EUR306 million, impacted by the sale of its Getronics International unit and mobile competition. Further, KPN reported that capital expenditure increased by 16%, or EUR75 million, to EUR535 million in the first quarter, related to the build-out of customer equipment for FTTx and IPTV services, and its Dutch 4G network. It was the first operator to launch 4G services in The Netherlands on 4 February 2013, integrating its new plans into existing 3G propositions, which are being offered to business and residential users. KPN adds that its 4G rollout is firmly on track, with currently approximately 30% of the population covered, including the cities of Amsterdam and The Hague.

KPN chief executive office Eelco Blok put a brave face on the Q1 performance, stating bullishly: ‘KPN’s performance in the first quarter was on track with the updated strategic agenda we presented in February. We continued to invest in our market positions in The Netherlands and made good progress to expand in post-paid and data in Germany. We see the success of our strategy in The Netherlands in the continuing momentum in TV and broadband, and the launch of [the country’s first] 4G services. Next to this, we have made meaningful progress with our restructuring program, and quality improvements are driving customer satisfaction upwards in the consumer markets. In the last months, we have taken important steps to strengthen our financial position. Our EUR2 billion hybrid bond programme has successfully been completed and on 10 April the AGM approved our announced EUR3 billion rights issue. We expect to launch the rights issue shortly.’

The company also reaffirmed its guidance, stating that it is on track to realise the outlook that was provided with the FY 2012 results on 5 February 2013, however the dividend outlook has been adjusted. Taking into account the expected launch of the rights issue shortly after the Q1 results publication and the fact that the rights issue will lead to a higher number of shares outstanding, KPN has decided to pay no dividend for the financial years 2013 and 2014. KPN needs the money to strengthen its balance sheet after an outlay of EUR1.35 billion on 4G mobile licences in Q4 2012.

Looking further ahead, KPN expects to see a stabilisation in The Netherlands ‘towards 2014’, while the next phase of its German strategy is expected to lead to service revenue growth combined with lower EBITDA margin, especially in 2013. CAPEX for fiscal 2013 is set at below EUR2.3 billion, while total capital expenditure for the period 2013-2015 is pegged at under EUR7 billion – including spending for its Reggefiber venture.

Netherlands, KPN