Monday, April 23, 2012

KPN: results 12Q1 preview

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

  • 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.
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  • 2013: the previous 95c DPS was withdrawn from guidance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.