KPN reports 92% jump in 1Q17 profit despite drop in revenue

26 Apr 2017

Dutch telecommunications provider KPN (also known as Royal KPN) has reported that its net profit for the three months ending 31 March 2017 surged 92% to EUR92 million (USD100.2 million) from EUR48 million in the corresponding period a year ago, although adjusted revenues were 2.4% lower year-on-year, mainly due to the impact of price pressure in the wholesale voice carrier market on iBasis sales (-10%). Revenues stood at EUR1.648 billion in 1Q17, compared to EUR1.689 billion a year ago, while EBITDA slipped 0.5% y-o-y to EUR556 million. Adjusted EBITDA, meanwhile, improved 2.8% from last year to EUR584 million, reflecting ‘improved operational efficiency as a result of simplification’. KPN’s first-quarter financial filing also confirmed that operating profit climbed sharply by 43% on an annualised basis to EUR201 million, ‘driven by EUR60 million lower amortisation charges, of which EUR45 million related to an impairment at iBasis in Q1 2016’. CAPEX in the period under review decreased by 16% y-o-y to EUR266 million, mainly due to lower network investments following a period of elevated spending.

Commenting on the strong first-quarter results, KPN chief executive officer, Eelco Blok, said: ‘In the first quarter of 2017, our market leading household proposition continued to deliver strong results in Consumer. In Business, our customers are migrating increasingly to integrated solutions. Furthermore, we strengthened our capabilities in security and cloud based services by completing two acquisitions. We have made a promising start to the second wave of our Simplification programme, which continues to drive substantial quality and customer satisfaction improvements across all segments in The Netherlands, resulting in structural spend savings.’ The company also intends to execute a EUR200 million share buyback programme in the coming period, it confirmed.

Operationally speaking, KPN reported a total of 5.256 million ‘Consumer Mobile’ customers at end-March 2017, up 0.6% from 5.227 million at 1Q16, but lower than the figure of 5.277 million reported at 31 December 2016. The firm’s total number of ‘Consumer Residential Households’ stood at 3.596 million at 31 March, down 2.9% from 3.704 million a year earlier, as more subscribers opted for mobile internet access rather than fixed internet connectivity. However, triple-play take-up continues apace, with the total number of households reaching 1.724 million at the end of the first quarter of the year, compared to 1.670 million a year earlier. Dual-play bundling also increased to 778,000 homes from 764,000 previously. In addition, KPN reported that its ‘Consumer Business’ segment reported a total mobile base of 1.826 million, up 1.9% y-o-y, although fixed-only voice lines declined by 20% to 449,000 and fixed-only broadband connections fell a net 19,000 to 131,000.

Netherlands, KPN