Dutch KPN telecom reports profit plunge on mobile competition
Troubled Dutch telecoms company KPN on Friday posted a 98-percent plunge in first-quarter profit, blaming competition in the hotly-contested local mobile market.
"Our financial results in the first quarter were impacted by the competitive environment in our mobile markets" chief executive Eelco Blok said in a statement.
KPN, a player amid widespread telecom dealmaking in Europe, posted 3.0 million euros ($4.1 million) in net profit, down from 152 million euros in the same period of last year.
Turnover fell by 8.2 percent from 2.1 billion euros to 1.9 billion euros year-on-year.
KPN has been facing tough competition in the Netherlands, with other providers under-cutting its market share through bundle packages and lower prices.
It has also suffered because of the increased use of free Internet phone services such as Skype.
KPN, which in February announced a planned 1,500-2000 jobs cut in the Netherlands by 2016, said however that it was making progress in other areas, notably the implementation of 4G coverage in the country.
"At the end of Q1, KPN reached nationwide 4G coverage, substantially ahead of the competition," it said.
KPN said it hoped to obtain European Commission approval in June to sell E-Plus to Spanish group Telefonica.
The deal is estimated to have been worth more than 8.5 billion euros, of which 5.0 billion was in cash and the rest in the form of an interest of 20.5 percent in Telefonica Deutschland.
KPN recommended a 0.07-euro divident per share for 2014 "subject to closing the E-Plus sale."
The group`s share price was down around 1.3 percent to 2.48 euros a share in mid-morning trade on the Amsterdam stock exchange`s AEX index on Friday.
In last October, America Movil finally threw in the towel after failing to buy KPN in a hostile takeover bid valuing KPN at 10.2 billion euros.
KPN is soon to face yet another player in the overcrowded Dutch telecoms market.
In January, US-based Liberty Global, already active in the Netherlands through UPC, announced it has Dutch cable operator Ziggo in a deal valued at 10 billion euros.
A former public operator, KPN privatised in 1994, and employs around 25,000 people worldwide.
KPN is one of several European telecom companies involved in dealmaking in the last year or so.
On Thursday, Mexican telecoms billionaire Carlos Slim appeared to have at last secured a firm European foothold with a deal giving him effective control of Telekom Austria, six months after failing to acquire the KPN.
The French market is in upheaval over realignments between mobile telecom groups.