KPN sinks to Q3 loss following big one-off charge
Oct 22, 2013, 9:31 AM
AMSTERDAM (AP) – Royal KPN NV, the Dutch telecommunications company that rejected a takeover bid by Mexican billionaire Carlos Slim this month, reported a large loss for the third quarter, citing weak business conditions, high investment costs, and an accounting charge.
The net loss of 241 million euros ($329 million) compares with a profit of 267 million euros in the same period a year ago.
KPN said Tuesday the loss was largely due to charges related to the proposed sale of KPN’s German unit E-Plus to Spain’s Telefonica SA for 8.55 billion euros. KPN took a net charge of 328 million euros on E-Plus after classifying it as a discontinued business, though it noted it will reap tax benefits from the sale for years to come. It expects the deal to close in mid-2014, pending approval from European regulators.
Operating profit, which excludes one-time charges as well as interest and tax, fell 38 percent to 281 million euros. KPN attributed that to weak demand from business customers and falling profits from mobile customers with smartphones. They have been switching KPN’s SMS service for cheaper mobile Internet messaging services such as WhatsApp.
CEO Eelco Blok said better times lie ahead, one of the reasons he opposed Slim’s 2.40 euro per share offer.
“Investments have been high, but we now have completed a large part of our 4G (high-speed mobile Internet) network rollout, and coverage should be nationwide by the end of the first quarter,” he said on a conference call.
“Financial results will improve in the course of 2014.”
Following the results, KPN’s share price in Amsterdam was up 1.7 percent at 2.27 euros. Many analysts believe Slim is waiting for the E-Plus sale to close and to see how the company performs before launching a new bid. He continues to hold a stake of just under 30 percent stake in KPN via his flagship company America Movil.
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