Strategy in a glance

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KPN revised its strategic market objectives to a level at which the respective businesses are expected to operate in the medium to longer term, taking into account the specific market dynamics surrounding the operations and striving for the right balance between growth and profitability.

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The Netherlands

Objectives and ambitions

  • Minimum broadband market share of >40% ; long-term goal 45%
  • Growing Revenue Generating Units and Average Revenue Per User at Residential
  • Minimum long-term total mobile NL market share of >40%
  • Leading business and ICT player with stable market positions in the Netherlands
  • 40-45% medium term EBITDA margin in the Netherlands
  • Finalization 4,000-5,000 FTE reduction program end 2013; continued FTE cost efficiency in 2014 and onwards

Strategic initiatives

  • Focus on bundles, offering integrated fixed and mobile services on all devices
  • Optimizing customer lifetime value
  • Continued commitment to improve customer experience and quality of services
  • Best in class network
  • Commercial launch of 4G LTE
  • Moving towards one-stop-shop for B2B

Status 2012

  • Domestic market shares stabilizing, TV market share growing
  • Lower line loss and growing FttH penetration
  • Accelerated growth triple play packages, increased revenue generating units per customer
  • Expanded addressable market; ~70% coverage of Dutch Market with minimum guaranteed speed of 40 Mbps
  • Highly valuable spectrum acquired
  • Prepared integration of Business Market with parts of Corporate Market
  • Accelerated restructuring program resulted in a reduction of ~1,900 FTE in 2012

 

Mobile International

Objectives and ambitions

  • Long-term market share goal of 20% in Germany
  • Medium-term EBITDA margin of 30%-35% in Germany
  • Long-term market share goal of 25% in Belgium
  • Medium-term EBITDA margin of 25%-30% in Belgium

Strategic initiatives

  • Market share growth in targeted underpenetrated regions
  • Expanding distribution capacity in Germany in under-penetrated regions
  • Improve underlying cost structure in Germany
  • Monetize competitive data network in Germany
  • Create competitive edge by speed differentiation in Belgium
  • Seizing opportunities to challenge the fixed line market in Belgium

Status 2012

  • Lower growth in prepaid and customer optimization in postpaid resulted in a slow-down in growth in Germany
  • Introduction of all-net flat propositions; strong postpaid net adds in Germany
  • Commercial initiatives launched to maintain price-leadership in Belgium
  • Market share Belgium increased to ~20%
  • HSPA+ has been largely rolled-out in Germany and Belgium

 

Financial framework

Objectives and ambitions

  • Commitment to maintain investment grade credit profile

Strategic initiatives

  • Substantial reinforcement of balance sheet and financial position
  • In February 2013, we announced a EUR 3 billion rights issue and, in addition, issuance of hybrid capital instruments.

Status 2012

  • As at December 31, 2012 KPN has a credit rating Baa2 with rating under review for downgrade by Moody’s, BBB with a credit watch negative by Standard & Poor’s and BBB- with a stable outlook by Fitch
  • Dividend outlook lowered to EUR 0.12 in 2012 and EUR 0.03 in 2013 and 2014

 

Corporate Social Responsibility

Objectives and ambitions

  • In 2015 60% of Dutch citizens consider KPN to have the best ICT infrastructure
  • 6,000 healthcare locations connected and 48,000 healthcare consumers supplied with personal comfort services in 2015
  • KlasseContact: 1250 chronically ill children connected to school and classmates with a webchair in 2015
  • 20% growth in use of services for The New Way of Living & Working in 2013
  • In 2020 climate neutral and save as much energy in the value chain as KPN itself uses every year
  • Recycle or re-use 400,000 cellular phones in 2014
  • In 2013 70% of Dutch citizens consider that their data is safe with KPN

Strategic initiatives

  • Modernizing the mobile network and improving the quality of the fixed network
  • Further roll-out and development of the services ZorgSamen, ZorgVrij and ZorgSlim
  • Further roll-out and expansion webchairs to connect chronically ill children with school and classmates
  • Further roll-out and development of propositions and use of our capability to provide service needed to facilitate The New Way of Living & Working
  • 6% reduction in energy consumption in 2015 and 100% green power as from 2014
  • Energy-efficient equipment in the network and for customers (modems, set top boxen)
  • Handset lease and collection of used mobile handsets
  • IT Security Top Priority Program and provision of Security Operations Center services to customers

Status 2012

  • 51% consider that KPN has the best network
  • More than 4,000 healthcare locations connected and ~21,000 healthcare consumers supplied with personal comfort services
  • 216 webchairs in use
  • 17% growth in use of services for The New Way of Living & Working
  • 103,000 tons of CO2 emissions, 6.2% reduction in energy consumption and 93% green power
  • ~72,000 recycled or reused mobile handsets
  • 67% of Dutch citizen consider that their data is safe with KPN
  • Security Operations Center set up