Dutch mobile profit collapse weighs on KPN earnings

BRUSSELS, April 25 Fri Apr 25, 2014 2:10am EDT

BRUSSELS, April 25 (Reuters) - Dutch telecoms group KPN posted a weaker-than-expected core profit in the first quarter, as earnings in its Dutch consumer mobile business collapsed in spite of heavy investments in the latest data technology.

The group, which in 2013 fended off a takeover bid by top shareholder Carlos Slim's America Movil, said core profits in its Dutch consumer mobile business fell 60 percent.

This was due to a phasing out of the leasing of handsets and customers opting to take up contracts with a SIM card but no phone as well as staying within their monthly usage allowances.

The fall in profits came in spite of a shift to fourth-generation (4G) mobile phone networks, which drew in new customers.

Its Belgian mobile business also posted a decline in core profit but at much lower levels than in the Netherlands.

The business unit also suffered a 25 percent decline of core profits as managers kept a closer watch on their telecoms spending in an economically difficult environment.

KPN fared better in its residential business, which offers broadband internet, TV and fixed telephone services and competes with cable operators such as Ziggo and UPC. Core profits rose by 22 percent as it increasingly managed to sell more than one service to customers.

Overall core profit, adjusted for restructuring costs, fell 21 percent in the first quarter to 621 million euros ($858.2 million), below the 635 million expected in a Reuters poll of six analysts.

KPN repeated its outlook for its financial performance to stabilise towards the end of the year, with free cash flow growing in 2015.

The group said it expected to resume dividend payments, with 0.07 euros per share due for 2014, subject to the completion of the sale of its German unit E-Plus to Spain's Telefonica. A third would be paid in August, the remainder in April 2015.

($1 = 0.7236 Euros) (Reporting by Robert-Jan Bartunek)

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