Bloomberg News

KPN Third-Quarter Profit Drops as Voice Revenue Declines

October 25, 2011

(Updates with restructuring in fifth paragraph, CEO comment in sixth.)

Oct. 25 (Bloomberg) -- Royal KPN NV, the largest Dutch phone company, said third-quarter profit fell 9.4 percent because of price reductions and as increasing use of mobile and social-media applications cut into voice revenue.

Net income dropped to 368 million euros ($512 million) from 406 million euros a year earlier, the company, based in The Hague, said today in a statement. That missed the 421 million- euro average estimate of 13 analysts compiled by Bloomberg. Sales declined 3.4 percent to 3.3 billion euros, a third consecutive drop.

Chief Executive Officer Eelco Blok has rearranged pricing, cutting rates for voice services because of regulation, while raising them for Internet use on mobile phones as consumers increasingly communicate with social media and mobile applications such as Skype and WhatsApp. KPN, which faces more competition in the Dutch mobile market next year, said it’s sticking to its full-year earnings forecast.

“The results are just meeting my expectations,” said Jos Versteeg, an analyst at Theodoor Gilissen Bankiers. “Repeating the outlook is a positive note and Mobile International is also doing quite good.”

Blok cut KPN’s 2011 earnings forecast in April, the month he started as CEO, as a result of the switch in consumer communication habits. He initiated a restructuring that will eliminate 4,000 to 5,000 jobs in the Netherlands through 2015.

Germany, Belgium

“We are also seeing a change to more Internet use on mobile phones in Germany and Belgium albeit at a much slower pace,” Blok said on a conference call today. KPN won’t adjust subscription models in the two countries because they are already built around data use, he said.

KPN fell as much as 1.8 percent in Amsterdam after the company said third-quarter earnings before interest, taxes, depreciation and amortization excluding restructuring costs fell to 1.3 billion euros from 1.4 billion euros a year earlier.

The stock was down 1.5 percent at 9.58 euros at 10:30 a.m., extending its decline this year to 12 percent and valuing the company at 14.2 billion euros.

The company reiterated that Ebitda will exceed 5.3 billion euros in 2011. The CEO said he expects positive effects from new mobile tariffs in the Netherlands beginning in the second half of next year.

Dutch Web Usage

About 43 percent of Internet users accessed the web via their mobile phones in the Netherlands this year, double the percentage last year, the Dutch statistics office CBS said today.

KPN gets almost 70 percent of revenue from its home market. That compares with Bonn-based Deutsche Telekom AG, Europe’s largest phone company, which generates about 40 percent of revenue from Germany. KPN’s domestic mobile-phone competition will increase as regulators reserve three licenses for companies like Ziggo BV and Tele2 AB in a frequency auction.

KPN’s German E-Plus wireless unit added 610,000 customers in the third quarter for a total of 22.1 million users, the company said. The brand’s market share in service revenue was stable at 15.9 percent last quarter. Blok said earlier this month that KPN may consider an acquisition in Germany.

--Editors: David Risser, Thomas Mulier

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at

To contact the editor responsible for this story: Kenneth Wong at

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