KPN sales fall; barely profitable in first quarter

By Toby Sterling, Associated Press | Posted - Apr 25th, 2014 @ 2:20am

AMSTERDAM (AP) — Royal KPN NV, the Dutch telecommunications company partly owned by Mexican billionaire Carlos Slim, nearly slumped to a first-quarter loss following a slide in its mobile services business and a shrinking market for business customers in the Netherlands.

In an unaudited set of financials, the company revealed Friday that it made a net profit of only 3 million euros ($4.2 million) during the period, down 98 percent on the 152 million euros made in the equivalent period last year. Revenues fell 8.6 percent to 2.0 billion euros.

KPN is in a state of flux at the moment as it tries to sell its German mobile telephone service arm E-Plus to Spain's Telefonica for approximately 8.6 billion euros in a deal that is receiving close scrutiny from European regulators. The Telefonica-E-Plus merger would create Germany's largest mobile operator by subscriber numbers, but would likely be less profitable than rivals Deutsche Telekom and Vodafone.

KPN CEO Eelco Blok said in a statement he was "confident" the deal will ultimately be approved. KPN shares, which have lost two-thirds of their value since Blok took office in 2011, fell 1.4 percent to 2.47 euros in Amsterdam Friday.

The company has suffered as the profitability of its voice and messaging services were undermined by both traditional competitors and Internet-based services such as WhatsApp. In early 2013, KPN issued new shares as investment costs in faster mobile networks were greater than expected and its debt approached unmanageable levels. Blok was reappointed this month.

The company predicted its financial performance would be "stabilizing toward the end of 2014."

Slim's America Movil owns 24.9 percent of KPN. Movil bid 2.40 euros per share to buy the company in 2013, but the takeover attempt derailed after a KPN interest group issued itself enough shares to block the deal — a poison pill measure.

The Netherlands' government has warned any buyout of KPN would come with strings attached to guarantee Dutch national security.

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Toby Sterling

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