KPN reported second-quarter revenues at EUR 3.19 billion (-3.0%) and EBITDA at EUR 1.19 billion (-10%). Revenues were slightly lower than expectations, while the EBITDA was in line. The net profit and earnings per share at EUR 315 million and EUR 0.23 were both in line with market expectations.
KPN reiterated its guidance for full year 2012, but sharply reduced its planned dividend. The company expects EBITDA at EUR 4.7-4.9 billion, the free cash flow at EUR 1.6-1.8 billion and capex at EUR 2.0-2.2 billion. The FY dividend is now at EUR 0.35, down from KPN’s previous guidance at EUR 0.90, in order to strengthen the company’s financial flexibility and support credit ratings. The operator wants to bring its ratio of net debt to EBITDA back to 2.0-2.5, from its current position at 2.6. A dividend of at least EUR 0.35 will be paid for FY 2013.
Belgian unit Base is still up for sale, as previously announced. German unit E-Plus has been pulled from the shelf and called a "significant value" for the company. KPN said it is pursuing cooperation with major shareholder America Movil.
KPN has upped investment in all networks, from customer equipment for IPTV and fibre to LTE, with a roll-out of the latter scheduled for this year in the Netherlands. The operator is also investing in mobile broadband for Germany and Belgium. The restructuring process in the Netherlands is still ongoing, with a vision towards a flatter administration. KPN is in addition investing in new propositions across a broad front.
Consumer Mobile
KPN Consumer Mobile NL added 33,000 new subscribers in the quarter, including 30,000 postpaid. The division now has 3.5 million postpaid and 4.1 million prepaid subscribers. KPN attributed the growth in subscriber numbers to new propositions, wholesale partners and stores. ARPU declined on an annual basis but recovered on a quarterly basis to EUR 36 for the postpaid segment. Underlying sales declined 8.8 percent to EUR 444 million and EBITDA by 5.9 percent to EUR 134 million. KPN expects its market share was stable at around 45 percent in terms of revenue.
Consumer Home
KPN Consumer Home NL added 89,000 new IPTV customers, reaching a total of 1.5 million, good for a TV market share of 19 percent (previous year 16%). The division added 39,000 FTTH subscribers in the quarter (including 13,000 with the acquisition of Lijbrandt) for a total of 164,000. In FTTH areas, KPN’s broadband market share went 8 points higher in the year than the national market average, with ARPU at EUR 12 higher than the national average (stable at EUR 39).
KPN now has a total of 753,000 triple play subscribers. The number of RGUs (revenue-generating units) per customer increased to 1.97 from 1.87 the year before. The company expects the number of broadband subscribers in the second half of 2012 to stabilize. Organic revenues declined by 2.4 percent to EUR 457 million and EBITDA by 19 percent to EUR 80 million. The division will carry out a major job reduction programme in the second half of the year.
Business and wholesale
The KPN Wholesale market saw gains from mobile data and hardware, but losses from traditional services. Organic sales grew 0.3 percent to EUR 601 million while EBITDA rose 5.8 percent to EUR 200 million, thanks to a cost savings programme. KPN believes that its market share was stable, partly due to the four KPN brands: KPN (corporate and big business, but also SMEs and SOHO), Telfort (SME and SOHO), XS4ALL (SOHO) and Yes Telecom (SMEs).
KPN Corporate Market suffered from pricing pressure, but still expects to maintain its market position. A large order came in from the UWV worth EUR 100 million. Excluding the sale of Getronics International, revenue was unchanged at EUR 366 million and EBITDA was down by EUR 5.6 million to EUR 24 million. This year, KPN completed its previously announced restructuring, cutting 2,000 to 2,500 jobs. Of these, 1,450 have now been eliminated.
KPN NetCo (wholesale) recorded sales down 6.1 percent to EUR 635 million and EBITDA 13 percent lower to EUR 345 million due to a decline in traditional services and the activation of FTTH subscribers. The rollout of VDSL has enabled speeds of at least 40 Mbps in 53 percent of the market, set to rise to 70 percent by the end of 2012. KPN will start rolling out LTE on a grand scale later this year. The availability of 1 Gbps over FTTH should reach 16 percent by the end of the year.
Abroad
KPN in Germany now has 23.5 million subscribers, with service revenues rising 3 percent. Total revenues increased by 2.9 percent to EUR 842 million, but EBITDA decreased 4.5 percent to EUR 335 million. The HSPA+ network should reach a coverage for speeds of 42 Mbps of 80 percent by the end of the year. The deployment of LTE will depend on demand, with work scheduled to begin in 2013-2014.
iBasis saw revenue lift 6.1 percent to EUR 261 million (partly due to positive currency effects), but EBITDA went 30 percent lower to EUR 7 million.
