Den Haag, 21-4-11
Revenues in the Netherlands lower than expected, new strategy accelerated to strengthen the business
• Lower than expected revenues in the Netherlands
• New strategy and related investment plans accelerated to strengthen the Dutch businesses
• Germany firmly on track with profitable growth, despite MTA reductions
• 2011 EBITDA outlook adjusted downwards, free cash flow outlook confirmed partly due to cash contribution tax facility
• KPN confirms dividend proposal of ≥ EUR 0.85 and EUR 1bn share repurchase program for 2011
KPN today announces an adjustment of its 2011 EBITDA outlook1 to > EUR 5.3bn2. The reduction is caused by recent trends in the Netherlands and accelerated investments as part of the new strategy plans, to be announced 10 May, to strengthen the market positions of the Dutch businesses.
Q1 trends affecting the Netherlands
• Consumer wireless revenues lower than expected following accelerated change in customer behavior
• Business Segment under increasing pricing pressure and rationalization
•Cost reductions insufficient to offset decline in revenues on top of severe MTA impact
KPN is making significant wireless portfolio adjustments in the Netherlands to address SMS and voice substitution by moving from voice to data-centric portfolios to optimize the value per customer.
The existing guidance for 2011 free cash flow is confirmed today. This is supported by a cash contribution resulting from Dutch tax facilities which allows KPN to accelerate investments to strengthen its businesses.
Accelerating implementation of new strategy
• Enhance market positions of Consumer wireless and Business wireline
• Improve broadband and TV market share
• Expand distribution capability and upgrade VDSL network
To further lower the cost base in the Netherlands, a new reduction program of 4,000 - 5,000 FTE, around 20 - 25% of the workforce in the Netherlands, for the 2011-2015 period has been prepared of which the majority will consist of outsourcing and off-shoring back-office activities. The multi-year reorganization costs are expected to amount to EUR 250 - 300m. The 2011 part of this amount is not included in the 2011 EBITDA outlook.
Message from the CEO, Eelco Blok
“We face negative trends in the Netherlands. I’m pleased with the strong underlying growth in Germany and Belgium where we will continue to invest. I am firmly committed to making KPN the best service provider in the Netherlands and to grow our international businesses. To make our Dutch businesses more robust I have decided to accelerate the investments related to the new strategy. I’m confident that we are taking all necessary measures to strengthen and grow our businesses and I will share my detailed KPN Group plans during the 10 May Investor Day“.
Press release for download here: www.kpn.com/results.htm