Another 2,000 jobs to go at Dutch telco KPN

A difficult economy and falling revenues from traditional services are having an impact on the company's bottom line.

After years of reorganisation which saw 4,650 jobs disappear, KPN today announced that it is planning to cut another 2,000 jobs in the next two years as a cost-saving measure.

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The company today announced its annual results, which showed that — in line with recent years — its revenue and profit on the slide. The company saw revenues for the fourth quarter of 2013 plummet by 14 percent year on year to €2.06bn, leading to a net loss of €108m.

Part of the reason for the downward trend is KPN's failure to adequately respond to the decrease in sales of traditional services, such as texting and phone calls, in the face of the rise of apps including WhatsApp, iMessage and FaceTime. In addition, KPN was able to sell 13 percent fewer phones in the fourth quarter of 2013, year over year.

It's enterprise unit isn't doing too well either, suffering from a decrease in demand for traditional services, coupled with pricing pressure.

CEO Eelco Blok said: "The continuing difficult macroeconomic conditions have caused a decrease in orders from corporate customers. This has caused a decrease of 8.3 percent in the corporate segment compared to the fourth quarter of 2012."

Numbers are down

All in all, KPN has suffered a difficult few years. Its revenue for 2013 is down 10 percent, from €9.46bn in 2012 to €8.47bn. Net profit was down as well, falling 6.7 percent to €293m.

Although the figures are far from positive, KPN remains upbeat, according to Blok.

"In 2013 we have continued to focus on improving our operational results by means of significant investments in our networks, products and customers," he said. "We have now laid a solid foundation, and expect that the financial results will stabilize towards the end of the year 2014 and that the free cash flow will start growing in 2015.

"We are confident that we will be granted permission by the regulator to sell E-Plus and we intend to pay a dividend over the fiscal year 2014. After the sale of E-Plus , KPN's financial profile will improve further. Moreover, we may be able to benefit from additional cash resources due to the dividend of the 20.5 percent stake in Telefónica Deutschland ."

Uncertainty about América Móvil

In addition, Blok claims that KPN does not fear the effect of the merger between Ziggo and UPC, which was announced last week , on the market: "Both cable providers have a monopoly in their respective fields. This merger won't change anything, since there is no overlap between Ziggo and UPC's areas."

Blok also touched on recent developments with telco América Móvil (AMX), which launched a takeover bid for KPN last year a move which was subsequently blocked by the company .

"They are still major shareholders with two commissioner seats [similar to a seat on the board]. We don't know what AMX is planning to do after mid April, when the period during which the Mexican company cannot launch a new bid ends, however, further consolidation in the European telecom market is inevitable. KPN already plays a role in that with the sale of E-Plus to Telefónica Deutschland . I am convinced that in time, market concentration will also occur in the Netherlands."

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