KPN plans more job cuts in ‘back to growth’ strategy (Netherlands)Dutch operator KPN has outlined plans to cut thousands of more jobs as part of its new ‘Back to growth’ strategy for the period 2008-2010. The company will cut another 2,000 FTE positions on top of the 8,000 already announced in 2005, while another 1,300 external FTEs will also go over the coming three-year period. The move is expected to result in EUR 240 million in annual cost savings, which the company will reinvest in growing new services such as broadband, TV and business IP services. KPN said it will pursue a “radical simplification” of its business, from front-end retail to back-end network operations, in order to reduce costs. This is expected to lead in the Netherlands business to a return to EBITDA growth after 2008 and revenue growth by 2010.
The company targets increasing EBITDA to over EUR 5.5 billion and sales to over EUR 15 billion in 2010, versus a reported EUR 4.9 billion and EUR 12.6 billion for 2007. That includes contributions from recent takeovers iBasis and Getronics, as well as expected high single-digit revenue and EBITDA growth at the mobile activities outside the Netherlands. For shareholders, KPN also announced plans for a EUR 1 billion share buyback this year and its intention to increase dividends over the medium term to 40-50 percent of free cahs flow, from 35-40 percent currently. Capital expenditure meanwhile will rise to around EUR 2 billion by 2010, from EUR 1.7 billion last year, while free cash flow is expected to exceed EUR 2.4 billion per year.
The new strategy was presented alongside fourth-quarter results showing sales up 20.4 percent from a year earlier to EUR 3.659 billion, thanks to the takeovers. EBITDA increased 5.6 percent to EUR 1.216 billion, while net profit jumped to EUR 1.581 billion from EUR 426 million, thanks to a EUR 1.2 billion tax gain at E-Plus in Germany. The full-year revenue decline of 0.8 percent was roughly in line with the company’s guidance for flat sales, while EBITDA dropped 0.6 percent versus an outlook for a flat result.
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