KPN is preparing further restructuring and cost cuts, people familiar with the matter told Telecompaper. The Dutch operator's new CEO Maximo Ibarra has hired McKinsey to look at the business, and this is expected to lead to new measures to reduce costs. Further details are expected before year-end, likely at the company's Capital Markets Day in November.
On 24 October, Ibarra will present the company's results for his first full quarter at KPN, after starting work in April. The market consensus is for a small drop of around 1 percent in revenues and EBITDA. While KPN continues to grow the number of fixed-mobile customers, other services are losing customers. At the same time, the business market appears to have bottomed out, with the first revenue growth in a long time in Q2.
A month later, on 28 November, KPN will hold its Capital Markets Day in Rotterdam. The current strategic plan dates from early 2016 and was meant to cover the period 2017-2019. The cost reductions under that plan are on track, but Ibarra has since shaken up the management. His former colleague at Wind Tre, Paolo Nanni was named head of transformation, and CCO Frank van der Post was replaced by consumer and business directors, Jean-Pascal Van Overbeke and Marieke Snoep.
McKinsey takes a look
Telecompaper has learned from multiple sources that McKinsey is looking at KPN's organisation. The consultants earlier advised Ibarra at Wind Tre, where he was CEO after the Italian operator was created at the start of 2017 from the merger of Veon and Hucthison's Italian activities. A spokesperson for KPN declined to comment on the information.
Given the numerous developments underway on the Dutch market, it appears likely that Ibarra will present a new strategic plan for the period to 2021-22.
Cost reductions, or better said job reductions, are a central focus in the telecom sector everywhere. Costs need to come down as revenues are falling, while technology such as virtualisation are further driving efficiencies. Mobile data is a key factor here: traffic continues to grow strongly (and that requires network investment) while mobile revenues are still falling, leading to a need to cut costs.
Major job cuts or voluntary redundancy programmes have already taken place recently at other incumbents, such as BT (13,000 or 8% or the workforce), Telstra (8,000 or 25%) and Verizon (44,000 out 153,000 employees). McKinsey is no stranger to such scenarios. KPN's history shows an average loss of around 500 jobs every 12 months, excluding takeovers. That means a three-year plan could see the loss of at least 1,500 jobs, or 12 percent of the total.
