The Netherlands’ biggest telecommunications group by revenue and subscribers, KPN Telecom (also known as Royal KPN), said its net income for the three months ended 30 June 2011 fell 11% year-on-year to EUR414 million (USD595 million), from EUR465 million in the same period a year ago, while revenue dipped 1.9% to EUR3.29 billion. KPN attributed the declining profitability in part on a high number of its smartphone cellular users cancelling high-end packages in favour of low-cost internet-based messaging service options. The Hague-based KPN noted that the increasing use of mobile and social media applications such as Skype and WhatsApp ate into its bottom line. KPN had hoped to charge users for access to such applications but the Dutch government blocked this plan as it set out its stall to create tough net neutrality laws in the country.
KPN’s weaker than anticipated performance saw it missing the EUR439 million net profit estimate in a poll of five analysts conducted by Bloomberg. Nevertheless, the telco reaffirmed its forecast that earnings before interest, taxes, depreciation and amortisation (EBITDA) will exceed EUR5.3 billion in 2011. Chief Executive Officer Eelco Blok said: ‘The market and regulatory headwinds that we have been experiencing … continued to affect our financial performance in the second quarter, notably in our domestic business’. The CEO, who took over in April, has revealed plans to shed between 4,000 and 5,000 jobs in the country by 2015.