Bloomberg News

KPN Gains as Bernstein Sees Dutch Improvement: Amsterdam Mover

June 07, 2013

Royal KPN NV (KPN), the Dutch phone company partly owned by Carlos Slim’s America Movil SAB (AMXL), gained as much as 6 percent after Sanford C. Bernstein raised its recommendation as the Dutch business may perform better than investors expected.

KPN traded 4.6 percent higher at 1.53 euros as of 10:13 a.m. in Amsterdam, valuing the company at 6.5 billion euros ($8.6 billion), and bringing the two-day gain to 9.7 percent, the largest such advance since April 11. Bernstein raised KPN to outperform from market-perform and increased the target price 12 percent to 1.85 euros.

“Our survey gives us some room for optimism regarding results recovery in 2014 and reason to believe that some things could go right,” Robin Bienenstock, a London-based analyst at Bernstein, said in the note published today. She raised her estimates for earnings before interest, taxes, depreciation and amortization, now forecasting a 2.2 percent decline in 2014 after a 13 percent drop this year.

KPN raised about 3 billion euros through a share sale to invest in operations and reduce debt. The company has scrapped dividends planned for 2013 and 2014. The phone operator needs to strengthen its balance sheet after spending 1.35 billion euros on wireless spectrum to increase network speed for customers using smartphones for surfing the Web, downloading music and watching videos.

“Structural ills are now not only well-known but priced in, and although the probability of a lot of good things happening to this company is low, they could create a theoretical increase in value up to 2.40 euros per share,” Bienenstock said. A sale of the German business would be possible if business gets worse, she said.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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