KPN reported fourth-quarter revenues flat at EUR 2.07 billion. One-time income including a tax credit of EUR 44 million offset a 2.1 percent drop in underlying sales. EBITDA fell by 3.0 percent to EUR 669 million, and the margin was down 1 percent point to 32.4 percent. EBIT roughly doubled compared to a year earlier to EUR 218 million, and the net loss narrowed to EUR 37 million, impacted by costs for repurchasing debt.
Capex increased 17 percent to EUR 482 million, resulting in negative free cash flow of EUR 199 million. Excluding one-time items, free cash flow would have reached EUR 405 million in 2014. Capex over the full year totaled EUR 1.41 billion, slightly above KPN's forecast for less than EUR 1.4 billion.
KPN said 2014 was a transformation year, with the sale of E-Plus, acquisition of Reggefiber and new management appointed. Results started to stabilise towards the end of the year and the Dutch operator expects this to continue in the coming quarters. For 2015, the company forecast stable EBITDA by year-end, cost savings of over EUR 400 million (up from EUR 300 million previously), capex of less than EUR 1.4 billion (down from less than EUR 1.5 billion earlier), cash flow higher than the adjusted EUR 405 million in 2014 (excluding any dividend from Telefonica Deutschland) and an increase in the dividend to 8 cents from 7, with a further increase in 2016. In Belgium, KPN plans to reduce investments and target a margin of 25-30 percent in the medium term.
KPN said its NPS ('net promoter score') has risen to a new peak, but pressure on traditional voice and mobile prices means results are still hurting. In 2015, it will focus on differentiating services to the customer, expanding its networks (LTE-1800, carrier aggregation, 100 Mbps fixed broadband) and simplifying its offerings with reduced hardware and fewer staff. The number of employees will fall by another 2,000 to 2,500 in the period 2013 to 2016.
In the Netherlands, KPN returned to growth in the fixed market, adding 45,000 new telephony customers as growth in VoIP offset PSTN losses. It also gained 41,000 broadband subscribers in the three months, for a total 2.77 million at year-end. This included 572,000 FTTH customers, up from 537,000 at the end of September. The number of IPTV customers increased by 83,000 over the same period to 1.60 million, while Digitenne and analogue TV customers dropped by 28,000 to 480,000 at year-end.
Triple-play penetration passed 50 percent for the first time, compared to 44 percent a year ago. The number of customers taking both fixed and mobile services also increased, by 116,000 to 485,000 at year-end. Consumer residential ARPU rose 2.3 percent year-on-year to EUR 44 as the average number of services per customer increased to 2.26 from 2.19 a year ago.
In the consumer mobile market, the operator added 108,000 customers in the three months, including 57,000 in the postpaid retail segment, for a total 7.54 million at year-end. The 4G customer base rose by 232,000 to 1.332 million, and KPN said the LTE network now accounts for as much traffic as the 2G and 3G networks combined.
KPN said churn was lower and as much as 50 percent less among customers on quad-play plans. ARPU also declined, to EUR 14 from EUR 15 a year ago. Price pressure and lower out-of-bundle revenues led to a drop in postpaid ARPU to EUR 26 from EUR 28.
