AMSTERDAM-- Royal KPN NV continued to struggle with weak demand
and lower prices during the first three months of the year, but it
expects operating income to stabilize toward the end of the
year.
The Dutch telecom company said Friday that net profit for the
first quarter tumbled 98% as income from its consumer mobile and
corporate businesses declined.
Net profit for the first three months of the year slumped to
EUR3 million ($4.1 million), from EUR152 million a year earlier.
Operating income from its consumer mobile business was down 61%,
caused by fierce competition in its home market of the Netherlands,
while operating income from corporate business fell 22% amid lower
demand.
Sales for the first quarter were down 8.2% at EUR1.996 billion,
from EUR2.175 billion in the same period a year earlier.
"In the second half of the year the trend in [earnings before
interest, depreciation and amortization] should improve," Chief
Executive Eelco Blok said, adding that supported by ongoing cost
savings this should result in a stabilization of its operating
income, or Ebitda, in the fourth quarter of the year.
To boost its performance and cut costs, KPN wants to simplify
its product portfolio, client processes and networks and
information-technology operations. KPN says the move will result in
between 1,500 and 2,000 job losses in the Netherlands and, combined
with lower investments, will yield more than EUR300 million in
annual savings by 2016.
At the same time KPN is in the process of merging its German
E-Plus business with that of Spain's Telefonica SA to ease its debt
burden and enable it to resume paying a dividend. The deal comes as
Europe's fragmented telecoms sector is undergoing a wave of
consolidation.
Mr. Blok said he is confident the company will obtain regulatory
approval for the deal, which is currently being scrutinized by
European authorities. "We are confident we will obtain regulatory
approval in June and that the sale will complete shortly
thereafter," Mr. Blok said.
Write to Robin van Daalen at Robin.VanDaalen@wsj.com
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