Financial profile
On 7 February 2006 KPN announced that the Board has decided that further optimization of KPN's capital structure is in the best interests of KPN and its shareholders. The redefined financing framework allows KPN to continue with its policy of accommodating an attractive dividend policy and maximizing returns to shareholders, whilst maintaining flexibility to grow and invest in its business. Henceforth, KPN will seek to ensure that net debt to EBITDA remains within the range of 2 to 2.5 times (2.4 at the end of Q2 2008). Furthermore, KPN intends to maintain a minimum credit rating of Baa2 by Moody's and BBB by S&P.
KPN intends to maintain the mid-term dividend policy according to which it will pay out a dividend between 40 and 50 per cent of annual free cash flow (defined as net cash flow provided by operating activities minus capex, plus proceeds from real estate and excluding tax recapture at E-Plus). KPN intends that the total amount of dividend paid over the fiscal years 2008 will be EUR 1 billion, in line with previous years.
Furthermore, KPN is committed to returning excess cash to shareholders. Since March 2004 up to Q3 2008, KPN has executed EUR 6.8 billion share repurchases and subsequently cancelled 30% of the outstanding shares.
At the end of Q3 2008 KPN had a net debt outstanding of EUR 11.7 billion and EUR 1.3 billion of cash. KPN intends to maintain a positive free cash flow quarter on quarter and expects a free cash flow of more than EUR 2.4 bn in 2008.
