Koninklijke KPN NV (KKPNF) Q3 2024 Earnings Call Highlights: Strong Mobile Growth and Fiber ...

GuruFocus News
3 min read

In This Article:

  • Group Service Revenues: Increased 3.4% on an organic basis in Q3.

  • Adjusted Revenues: Increased 4.2% year on year.

  • Adjusted EBITDA: Grew by 2.3% year on year.

  • EBITDA Margin: 45.3% for the quarter.

  • Free Cash Flow: Broadly stable year-to-date compared to last year, with EUR542 million generated so far.

  • Consumer Mobile Service Revenues: Continued strong growth driven by solid commercial momentum.

  • Postpaid Base: Increased by 45,000 subscribers.

  • Leverage Ratio: 2.5 times net debt to EBITDA.

  • Cash Position: EUR590 million at the end of the quarter.

  • Fiber Footprint: Covers 62% of the Netherlands, with a target of 64% by year-end.

Release Date: October 28, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Koninklijke KPN NV (KKPNF) reported a 3.4% organic increase in group service revenues for the third quarter, with growth across all segments.

  • The company achieved healthy EBITDA growth and maintained a stable year-to-date free cash flow compared to last year.

  • Koninklijke KPN NV (KKPNF) expanded its fiber footprint to cover 62% of the Netherlands, with plans to reach 80% by the end of 2026.

  • The company reported strong commercial momentum in mobile, with a 6.7% service revenue growth driven by an increase in postpaid subscribers.

  • Koninklijke KPN NV (KKPNF) is confident in delivering its full-year 2024 outlook and midterm ambitions, supported by its 'connect, activate, and grow' strategy.

Negative Points

  • The company faced increased competition in the fixed broadband market, leading to elevated churn and pressure on service revenues.

  • Net Promoter Score (NPS) showed some adverse movements, particularly in the consumer segment, due to rising costs of living impacting customer sentiment.

  • The EBITDA margin decreased slightly to 45.3% due to higher operating costs related to third-party access costs and inflation.

  • Koninklijke KPN NV (KKPNF) experienced a decline in its broadband base by 9,000 due to a competitive environment and migration to fiber.

  • The company anticipates a deceleration in year-on-year service revenue growth in Q4 due to less tailwind from price increases and tougher comparisons, especially in B2B.

Q & A Highlights

Q: Can you provide more color on the free cash flow growth expectations for the next couple of years, especially given the consensus models? A: Chris Figee, CFO, explained that the free cash flow growth is expected to be low to mid-single digits due to higher interest and tax payments. The operational cash flow (EBITDA minus CapEx) is growing, but annual increases in taxes and interest payments are impacting the free cash flow growth.

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