KPN reported fourth-quarter sales down 9.6 percent to EUR 2.06 billion, excluding its German operation E-Plus, which is planned for sale to Telefonica. Only the company's Dutch residential activities reported growth, with sales up 2.5 percent, while all the other operations lost revenues on an annual basis, led by Dutch consumer mobile, down 15 percent.
EBITDA fell 29 percent year-on-year to EUR 581million, in part due to the company abandoning its handset lease model. Operating profit still almost doubled to EUR 98 million, and the net loss was reduced to EUR 108 million or 4 cents a share. Including E-Plus, KPN posted a loss of 6 cents a share.
After completing the job reduction plan started in 2011, which led to the loss of 4,650 positions, KPN announced a new round of lay-offs, which should lead to 1,500-2,000 jobs cut by 2016. Part of the company's simplification plan announced at the Q3 2013 report, the latest restructuring is expected to lead to EUR 300 million in cost savings. Pending the sale of E-Plus, which KPN said it's confident will go ahead, the company plans to resume dividends for fiscal 2014, with a payment of 7 cents a share. A third will be paid out as an interim dividend and the remainder in the spring of 2015.
KPN expecs its results to stabilise by the end of 2014 (formerly: toward 2014), and free cash flow should grow again from next year. The Dutch operator plans capex of less than EUR 1.4 billion this year and less than EUR 1.5 billion in 2015. From next year, the budget incldues Reggefiber, the fibre venture in which KPN is increasing its stake. KPN said also that it expects to pay little tax in the Netherlands in the coming years, due to the losses generated from E-Plus. A reduction is gross debt should also lead to lower interest charges, while the 20.5 percent stake received in Telefonica Germany as partial payment for E-Plus will generate dividend income. This should help the company increase its dividend from 2015.
Following extensive network investments last year, KPN reached 80 percent coverage with its LTE network and expects to have nationwide coverage by the end of March. The fibre network has reached 25 percent coverage, and together with VDSL, services at 40 Mbps are available for 70 percent of the Dutch population. As a result, KPN plans to slow the fibre roll-out in the coming years. In Belgium, the group is targeting national LTE coverage by the end of this year.
