KPN Telecom (also known as Royal KPN) has reported a sharp 8.6% fall in unaudited revenue to EUR2.0 billion (USD2.76 billion) for the first three months of this year, while net earnings slumped 98% to EUR3 million from EUR152 million in 1Q13 due to a worrying slump in profitability at its mobile division despite investing heavily in new technologies (e.g. 4G Long Term Evolution [LTE]); core profits in its Dutch consumer mobile business fell 60%. KPN blamed the fall in part to the phasing out of leasing of handsets, as well as the impact of increasing numbers of customers opting to take up contracts with a SIM card-only option and staying well within their monthly usage allowances. Furthermore, overall core profit, adjusted for restructuring costs, fell 21% in the period under review to EUR621 million), below the EUR635 million expected in a Reuters poll of six analysts.
The telco, which is partly owned by Mexican billionaire Carlos Slim’s America Movil (AM), also reported a 25% decline in core profits at its business division in the Netherlands, while its Belgian mobile business also posted a decline in core profit, albeit at much lower levels than in the Netherlands. KPN is however, forecasting that its financial performance will stabilise toward the end of 2014. The Dutch carrier is trying to divest its German mobile subsidiary E-Plus to Spain’s Telefonica for approximately EUR8.6 billion, in a deal that is receiving close scrutiny from European Union (EU) regulators.