KPN Earnings Fall as Enterprise Drop Offsets Consumer Gains

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  • Carrier wins mobile, broadband and digital TV customers
  • KPN to face stiff competition from Vodafone-Liberty venture

Royal KPN NV reported a decline in second-quarter earnings as a revenue drop at its enterprise business offset customer gains for mobile, broadband and digital TV services.

Adjusted earnings before interest, taxes, depreciation and amortization from continuing operations fell 1.7 percent to 592 million euros ($651 million), KPN said in a statement Wednesday. The average estimate in a Bloomberg survey of analysts was for 584 million euros. Sales fell 3.7 percent to 1.68 billion euros, compared with the average estimate of 1.7 billion euros.

KPN is succeeding in attracting users to all its consumer products ahead of potentially intensifying competition in the Netherlands. Vodafone Group Plc and Liberty Global Plc offered the European Commission remedies to win approval for a planned Dutch joint venture that would offer a combination of mobile, broadband and TV services. The European Commission is scheduled to approve the deal or extend a review by Aug. 3.

Meanwhile, Tele2 AB will continue to invest heavily in the Netherlands and Deutsche Telekom AG’s T-Mobile is changing its strategy to compete on price. Both those rivals also improved fourth-generation network coverage in past years, putting further pressure on KPN.

KPN, the former Dutch phone monopoly, added 23,000 mobile contract subscribers, 15,000 broadband customers and 33,000 new customers for its digital TV product. The company spent more money on keeping existing customers, mostly as the number of 2-year contracts expiring this year is higher than last year, Chief Executive Officer Eelco Blok said on a call with journalists. That trend is set to continue in the third and fourth quarters, he said.

Revenue at the enterprise segment fell 5.8 percent to 573 million euros. As the company works to cut costs at the unit, profitability is set to improve in the coming quarters, followed by an recovering trend in sales, Blok said.

Shares of KPN fell 0.8 percent to 3.05 euros at 10:31 a.m. in Amsterdam, valuing the company at 13 billion euros.

Carlos Slim’s America Movil SAB, KPN’s largest shareholder, may be weighing a sale of its stake, people with knowledge of the matter said in April. America Movil holds 21.1 percent of KPN’s stock.