KPN sees light at the end of the tunnel after positive Q2

Dutch operator KPN predicted its financial performance will stablise towards the end of 2014, after its second quarter earnings exceeded analyst estimates thanks to customer gains and cost cuts.

Analysts at Jefferies said the second quarter was consistent with the company's "game plan" of flushing out legacy tariffs and stabilising its share price, "with improving KPIs in some areas and EBITDA even 2 per cent ahead of consensus."

KPN CEO Eelco Blok said the company's strong focus on high-quality services through best-in-class networks and products such as LTE, IPTV, and cloud services supported the uptake of multi-play propositions by consumers as well as businesses. The company gained 53,000 new postpaid consumer customers and 16,000 business customers.

"Driven by the good strategic progress, including high customer additions in mobile and IPTV, and the execution of the Simplification programme, we are witnessing a quarter-on-quarter financial improvement and remain on track for stabilising financial performance towards the end of this year," Blok added.

In the second quarter, adjusted revenue was 7 per cent lower year on year at €1.98 billion ($2.65 billion), in part due to competition on the mobile market. Adjusted EBITDA fell by 19 per cent as a result of declining revenue, reaching €633 million.

That figure compared with analysts' €619 million average estimate compiled by Bloomberg. A Reuters' poll of seven analysts had predicted €626 million.

Blok noted that the company is confident that the sale of E-Plus to Telefónica Deutschland will complete in the third quarter of this year and would allow the company to start paying dividends again for 2014.

According to Reuters, Blok also maintained that the relationship with its largest shareholder, America Movil, was very good. Relations had deteriorated after an independent KPN foundation blocked efforts by the Mexican company to buy a majority holding. America Movil now owns a 22.6 per cent stake in KPN.

For more:
- see this Bloomberg article
- see this Reuters article
- see KPN's results statement

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