KPN grows Q2 net profit despite lower revenue, EBITDA

KPN reported declines in adjusted revenue and EBITDA during the second quarter of 2016, as growth in the number of bundled services sold by its consumer division was offset by lower sales at its business unit.

The Netherlands-headquartered operator saw adjusted revenue decline 4.3 per cent year-on-year to €1.6 billion ($1.7 billion) during the second quarter, while adjusted EBITDA was down 1.7 per cent at €592 million. Despite those declines, net profit grew by 1.3 per cent year-on-year to €162 million, which seems in part to be due to an ongoing programme to reduce indirect costs.

KPN's adjusted second-quarter EBITDA beat the €584 million average predicted by analysts polled by Bloomberg. However, revenue was slightly below the €1.7 billion predicted, the news agency reported.

In KPN's earnings statement, CEO Eelco Blok commented that execution of the operator's "simplify, grow, innovate" strategy is "firmly on track" and explained that the company "again saw strong growth of our bundled services" during the second quarter.

KPN also "launched a 4K TV pilot in the consumer market and introduced our managed hybrid cloud proposition in the business market," Blok noted.

A breakdown of KPN's overall figures reveals that adjusted revenues at its consumer business fell 0.9 per cent year-on-year to €767 million in the recent quarter, and adjusted EBITDA was 2.4 per cent lower at €450 million. The operator explained that growth in residential revenues was offset by a decline in mobile service revenues -- down 2 per cent year-on-year -- and lower hardware sales.

The business division saw adjusted revenue fall 7.3 per cent year-on-year to €573 million, and adjusted EBITDA decline 7.2 per cent to €347 million. The company said revenues fell due to lower sales of traditional services, while EBITDA declined on the back of the lower revenues.

Figures for the first half of 2016 showed similar trends, with adjusted revenues down 4.1 per cent over the same period of 2015 at €3.5 billion. Adjusted EBITDA fell 3.1 per cent to €1.16 billion, and net profit grew 15 per cent year-on-year to €210 million.

Blok noted that KPN "completed the migration of the majority of our consumer customers to a new integrated order management IT platform" during the opening six months of 2016, explaining that the move "is an important milestone in our simplification programme."

For more:
- see KPN's earnings statement (PDF)
- view this Bloomberg report

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