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KPN Q2 Profit Falls, To Sell German Mobile E-Plus Business To Telefonica

KPN Q2 Profit Falls, To Sell German Mobile E-Plus Business To Telefonica
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Dutch telecommunication firm Royal KPN NV (KPN: Quote,KKPNY.PK, KKPNF.PK) Tuesday reported a 68 percent fall in second-quarter profit hurt by competitive environment in mobile markets as well as continued decline of traditional fixed services.

The company has also agreed to sell its German mobile telecommunications business E-Plus to Spanish telecom group Telefónica S.A. (TEF, TDE.L). KPN shall receive a cash consideration of 3.7 billion euros and newly issued shares. KPN shares are currently trading up about 6 percent in Amsterdam.

CEO, Eelco Blok stated, "Conditions remained challenging in the first half of 2013, however we have further strengthened our market positions. We continue to improve our networks, especially with the accelerated 4G rollout in the Netherlands."

Citing strong postpaid net additions and data growth in Germany and Belgium, the company said it is progressing forward with simplifying its processes and improving underlying cost structure.

In the second quarter, the company's net profit attributable to equity holders fell to 107 million euros from 334 million euros in the previous year. On a per share basis, earnings were 0.02 euros, significantly lower than 0.14 euros per share reported last year.

Earnings before interest, tax depreciation and amortization or EBITDA, a key earnings metric, declined 11 percent to 1.03 billion euros from 1.17 billion euros in the prior year.

Underlying EBITDA decreased 14 percent year-over-year, as a result of lower revenues and higher commercial investments, mainly in Germany supporting growth in postpaid net adds and data revenues.

Revenues and other income for the quarter fell 8.1 percent to 2.94 billion euros. On an underlying basis, revenues and other income were down 6.1 percent. The company attributed the fall in revenue to reduced revenues at Consumer Mobile, Business, NetCo and Germany, partly offset by increasing revenues at Consumer Residential.

Consumer Residential revenues and other income grew 5 percent from last year, while Consumer Mobile reported a 12 percent decline. Revenues and other income for the Business segment declined 6.1 percent, and NetCo generated revenues that was 7.6 percent lower.

In Germany, revenues and other income fell 4.6 percent, and in Belgium, the revenue drop was 12 percent. Revenues from the Netherlands decreased 9 percent to 1.74 billion euros, of which Mobile International revenues were 997 million euros, down 7.9 percent from the preceding year.

Depreciation, amortization and impairments advanced to 781 million euros from 549 million euros in the prior year.

In addition, KPN said it is on track to realize its outlook.

Separately, Telefonica Deutschland Holding AG said it has signed an agreement with KPN to acquire KPN's German mobile telecommunications business E-Plus. As per the deal, KPN shall receive a cash consideration of 3.7 billion euros and newly issue shares.

Telefónica S.A. will subscribe the issued shares proportionately to its current shareholding in Telefonica Deutschland.

In Amsterdam, KPN shares are currently trading at 1.9 euros, up 0.10 euros or 5.78 percent.

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by RTT Staff Writer

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