KPN will announce its Q2 results on 27 July before the market opens. Market expectations call for revenues down 3 percent to EUR 3.31 billion, EBITDA up 4 percent to EUR 1.38 billion and net profit rising 28 percent to EUR 475 million. EPS is estimated up 41 percent to EUR 0.31. These suggest growth figures similar to Q1. KPN will be likely to focus on the growth areas: mobile data revenues at KPN, E-Plus and Base, income from MVNOs in the Netherlands, France and Spain and TV.
The focus will also be on the company's outlook. The 'Back To Growth' plan for 2008-2010 is nearing an end and CEO Ad Scheepbouwer will step down in mid-2011. Many of the big European operators have unveiled multi-year strategic plans in recent months (see our Research Brief 'FT is next with multi-year plan'), and KPN has already hinted it will unveil new plans yet this year.
The current guidance for 2010 and 2011, and the reported figures for 2009, are as follows:
- 2009: revenues EUR 13.5 billion, EBITDA 5.2 billion, capex 1.8 billion, free cash flow 2.4 billion, dividend 69 cents.
- 2010: flat revenues, EBITDA over EUR 5.5 billion, capex less than 2 billion, free cash flow over 2.4 billion, dividend 80 cents.
- 2011: higher EBITDA and free cash flow, dividend of at least 85 cents.
These figures show that the market is conservative and does not expect much growth. The same is true for the years after 2011. We've seen in the past that KPN maintains its targets for free cash flow with cost control and the sale of assets (see our commentary 'KPN verkoopt assets terug aan staat'). The question is not whether KPN continues to tap these resources, but if the company plans to grow through acquisitions. With another year to go, it's too early to expect an announcement on Scheepbouwer's successor, but this should happen by the Q3 report (26 October) or Q4 (end January 2011).
Back to the Q2 report, we can expect an update from KPN on a number of issues:
- Deconsolidation of KPN Belgium,
- Return to positive service revenues growth at E-Plus,
- Completion of the VDSL roll-out and possible campaign launch,
- Reggefiber's request for financing at the EIB (Europese Investerment Bank),
- An outsourcing contract to fill out the promised workforce reduction,
- Offshoring by Getronics.
In the past quarter, KPN has bought a number of assets: spectrum in the 2.6 GHz band, a stake in Jasper Wireless, 52 shops from Dexcom and the MVNO Yes Telecom. In addition, there was rumour of the planned sale of masts to Novec for EUR 20 million.
