Royal KPN NV ((KKPNY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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KPN’s recent earnings call highlighted a positive sentiment, driven by strong revenue growth and significant fiber expansion. Despite challenges in consumer mobile pricing and a decline in free cash flow in the first half of the year, the company’s progress in key growth areas has been commendable.
Group Service Revenue Growth
KPN reported a 3.7% increase in group service revenues, showcasing growth across all segments. The consumer segments, both fixed and mobile, performed exceptionally well, contributing to this positive outcome.
EBITDA and Free Cash Flow Outlook Raised
The company has raised its full-year 2025 outlook for EBITDA and free cash flow. This optimistic revision is attributed to favorable legal settlements and solid business and financial progress.
Fiber Footprint Expansion
KPN’s fiber expansion efforts have been substantial, with the network now covering two-thirds of the Netherlands. Nearly 80% of homes are connected to fiber, marking a significant milestone in the company’s infrastructure development.
B2B Segment Growth
The B2B segment delivered a robust performance, with a 5.7% year-on-year growth. This was driven by strong results in mobile, cloud services, and broadband sectors.
Wholesale Revenue Increase
Wholesale service revenues saw an impressive growth of over 8% year-on-year. This was largely driven by the mobile and international sponsored roaming business.
Consumer Mobile Pricing Pressure
KPN faced challenges in consumer mobile pricing, particularly in the no-frills segment. This pressure affected postpaid revenue despite an increase in net additions.
Free Cash Flow Decline in First Half
The first half of the year saw a 15% decline in free cash flow compared to the previous year. This was primarily due to working capital phasing and higher interest payments.
Impact of Competitive Intensity
Competitive intensity remains a challenge, especially in the no-frills mobile segment. Increased promotional activities have impacted postpaid revenue.
Forward-Looking Guidance
KPN’s guidance for fiscal year 2025 includes a 3.7% increase in group service revenues, with notable growth in the B2B segment. The company expects a recovery in free cash flow in the second half of the year and remains committed to its 337 CAGR framework, targeting approximately 3% growth in service revenues and adjusted EBITDA, and a 7% increase in free cash flow annually over the coming years.
In conclusion, KPN’s earnings call reflected a positive outlook, with significant achievements in revenue growth and fiber expansion. Despite some challenges, the company’s strategic initiatives and revised financial outlook suggest a promising trajectory for the future.