Sales down 10% in 2013 but KPN remains upbeat

5 Feb 2014

The Netherlands-based telco KPN has reported a 10% drop in revenues for its financial year to 31 December 2013, with sales of EUR8.47 billion (USD11.45 billion), while revenues for the fourth quarter slid from EUR2.38 billion in 2012 to EUR2.06 billion last year. The firm attributed the poor results to pressures in the Consumer Mobile and Business markets, though these were partly offset by an improved performance in the Consumer Residential sector. Net profit for 2013 was down 6.7% at EUR293 million, while the firm reported a net loss of EUR108 million in the final three months of the year, which was an improvement on the year-earlier loss of EUR263 million. The company said it has completed a workforce reduction programme which began in 2011 and has seen it cut 4,650 full-time employees. It says it plans to axe a further 1,500-2,000 workers by 2016 in an effort to reduce CAPEX by EUR300 million.

In operational terms, domestic consumer mobile connections fell 3% in 2013 to end the year at 7.35 million, though the subscriber losses came in the pre-paid segment and there was a net addition of 8,000 more lucrative post-paid users during the year. In the residential fixed line sector, there is a continuing downward trend for traditional telephony connections – down 22% year-on-year – but the number of voice-over-internet protocol (VoIP) subscribers rose by 10% over the same period, with VoIP now accounting for 1.80 million of the firm’s 2.67 million fixed lines in service. Broadband internet subscriptions were up 1.6% in 2013 at 2.74 million. The number of business access lines fell by 13% over the twelve months and KPN ended 2013 with 994,000 business lines in service, though there was a 1.1% increase in the number of business mobile users.

Away from the Netherlands, KPN claimed a 6.6% rise in customer numbers at its German operation E-Plus, with the firm ending 2013 with 24.95 million subscribers. The Dutch parent is planning to merge E-Plus with German rival Telefonica O2, though the deal is still subject to regulatory clearance. In Belgium, meanwhile, KPN’s local cellular operator BASE claimed 3.39 million customers at the end of December, down 1% year-on-year.

CEO Eelco Blok commented: ‘In 2013, we continued our clear focus on improving operational performance driven by investments in networks, products and customers. We have now put in place strong fundamentals at KPN and expect stabilising financial performance towards the end of the year 2014 and FCF [free cash flow] to grow in 2015.’ Blok also said that KPN is ‘confident’ of receiving regulatory clearance for the sale of its German wireless operation E-Plus which he says will further improve the company’s financial profile.

Netherlands, KPN Telecom (or Royal KPN),

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