KPN stumbles in Q2, blames rise in smartphone apps

The Dutch telco KPN surprised industry analysts by announcing an 11 per cent decline in net profit in the second quarter. Analysts polled by Dow Jones Newswires had expected a figure of around €441 million, but the company only managed to return €414 million due to continued weakness in its home market.

The company is blaming increased usage of VoIP and IM smartphone apps, such as Skype and WhatsApp, for this fall in profits, as well as new government regulations that mandate lower roaming tariffs. The rise in the usage of smartphone apps has cut into more traditional voice and SMS revenues for KPN, which plans to make significant price increases to its mobile data tariffs in a reaction to the Dutch government's approval of strong net neutrality laws. .

"The market and regulatory headwinds we have experienced in quarter one continued to affect our financial performance in the second quarter, notably in our domestic business," KPN CEO Eelco Blok said in a statement. 

While KPN's revenues fell to €3.29 billion for the quarter, with EBITDA of €1.308 billion, this fall of 5.6 per cent year-on-year was slightly better than earlier estimates. "We see the results as a solid first step to rebuilding investor confidence, but this is just the beginning," RBS analyst Giles Thorne told the Financial Times.

Outside the Netherlands, which generates 70 per cent of the company's revenues, KPN's operations in Germany and Belgium seemed unaffected by consumers' smartphone behaviour. Its German subsidiary E-Plus reported a growth of 7.5 per cent, while BASE in Belgium managed a 7.8 per cent increase for the quarter.

For more:
- see this Dow Jones Newswire article
- see this AFP article
- see this Financial Times article

Related Articles:
KPN Mobile hikes data charges in reaction to net neutrality ruling
KPN's plans for tiered data pricing provoke outcry
Dutch cableco Ziggo plans mobile service to challenge KPN
KPN lowers 2011 outlook, plans to cut 5,000 Dutch employees

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