KPN: results 12Q1 preview

KPN reports 12Q1 tomorrow, April 24 at 7:30 AM. Here's what's going on at the company.

Consenses:

• 12Q1: revenue EUR 3136m, EBITDA 1131m, EBIT 560m, net 309m, EPS 20c.
• 2012: revenue EUR 12715m, EBITDA 4778m, EBIT 2430m, net 1341m, EPS 95c

Reported numbers: the DSL-market is beiung slaughtered, but FTTH is on the rise.

• Tele2: the DSL market is still losing ground.
• Ziggo: but FTTH is gaing momentum.

Results 11Q4 and guidance: see here and here and here.

• 2012: EBITDA EUR 4.7-4.9bn, capex 2.0-2.2bn, FCF 1.6-1.8bn, DPS 90c.
• 2013: the previous 95c DPS was withdrawn from guidance
• Broadband market share NL: to 45% by 2015

Financials. Doubts remain over the sustainability of current trends.

• Several profit warning in 2011.
• Several ratings cuts.

Management & structure: see here and here. KPN is nearing the end of its restructuring.

• C-level management was installed; new CFO pending.
• An Executive Committee was created.
• Yes Telecom management was discharged; Atlantic Telecom is integrated in Telfort Business.
• Job cuts ongoing.

Regulation: no relief yet.

• MTR: tariffs will reach a (preliminary) bottom by Sep 1 2012.
• International roaming: preliminary tariff bottom from July 1 2014.
• Increased regulatory oversight from Opta (KPN hopes to resolve this by the end of 2012).
• NMa investigation of collusion on mobile market.

M&A: see here. 

• KPN Spain is for sale.
• Base is for sale, rumoured value EUR 1.8bn (= 6.6x 2011 EBITDA). A sale and subsequent debt reduction will not automatically lead to an improved net debt/EBITDA ratio, since the EBITDA-margin is quite high.
• What about the other international assets: E-Plus, iBasis, Ortel?
• Reggeborgh ISP takeovers pending at NMa. Will probably be approved.
• Acquisition of Reggefiber ISPs was approved, but the Caiway deal was not.
• Ongoing tower sales.

Mobile NL:

• T-Mobile NL is for sale. A new owner could step up competition.
• Auction 2012, likely to cost KPN EUR 300-400m; enabling a newcomer?

Reggefiber and broadband NL:

• At YE 2011: 951k HP (so probably around 900k HC) and 277k HA.
• Quarterly additions in 11Q4: 107k HP and 38k HA (o/w 25k for KPN).
• In 2012, HP additions will be close to 400k and HA at around 35-40% i.e. 140-160k.
• Expanding the stake from 41 to 51% for EUR 99m at 1m HC or Dec 31 2012. HC will be nearing 900k by 12Q1 and 1m by the end of 2012.
• Expanding stake from 51 to 60% for EUR 116-161m at 1.5m HC or Jan 1 2014. This will lead to consolidation, which will contribute to both net debt and EBITDA.
• Reggeborgh can exercise its put option on the remaining 40% stake from July 1 2017, for EUR 647m.
• When will FTTH net adds start to compensate for DSL losses? FTTH subscriber net adds were 25k in 11Q4, but overall BB net adds were -9k. Looks like both FTTH net adds and DSL net losses could accelerate.