KPN is planning another round of job cuts as part of an aggressive cost cutting and streamlining programme designed to stem falling profits, the Dutch incumbent has revealed.
The operator said it will cut the equivalent of between 1,500 and 2,000 jobs by 2016 as it seeks to simplify its product portfolio, client processes, networks, and IT operations. KPN uses a Full Time Equivalent (FTE) model when referring to job cuts – which measures the workload of individual staff – and said it has already cut 4,650 FTEs as part of a previous round of lay offs started in 2011.
KPN predicts that its cost cutting program will generate capex and opex savings of at least €300 million ($405 million) per year by 2016.
CEO Eelco Blok said during the presentation of KPN's 2013 results that the company is unable to rule out compulsory redundancies in the latest round of staff cuts, Bloomberg reported.
KPN is streamlining its operations amid fierce competition in its core European markets – the Netherlands, Belgium, and Germany. The tough environment saw net profit fall 6.7 per cent to €293 million in 2013, and EBITDA fall 14 per cent to €2.8 billion.
The operator cut its fourth quarter net loss from €263 million in 2012 to €108 million in 2013, but EBITDA fell 29 per cent year-on-year to €581 million, well short of an average €631 million predicted by analysts in a Bloomberg poll.
Blok predicted that KPN's financials will begin to stabilise by end-2014, and said the company is confident it will gain regulatory approval for the planned sale of its German E-Plus business to Telefónica Deutschland.
"KPN's financial profile will be further improved following the sale," Blok said, adding that the company could also "benefit from additional excess cash by receiving dividends from the 20.5 per cent stake in Telefónica Deutschland".
The European Commission last week refused a request from German competition authorities to review the E-Plus sale, claiming its regulators are better placed to decide whether to approve the transaction, which will cut the number of mobile operators in Germany from four to three, and create the country's largest operator by subscribers numbers.
KPN's results statement underlines Blok's confidence by omitting E-Plus from its future strategy. The operator said it will focus on LTE, IPTV and bundled services in its domestic market, and on building its post-paid subscriber numbers at its BASE operation in Belgium.
The operator is close to achieving nationwide LTE coverage in the Netherlands, and aims to hit the same goal in Belgium by end-2014.
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