KPN posts fourth quarter loss; to issue new shares
- Article by: TOBY STERLING
- Associated Press
- February 5, 2013 - 1:46 AM
AMSTERDAM - Royal KPN NV, the largest telecommunications company in the Netherlands, said Tuesday it plans to issue (EURO)4 billion ($5.4 billion) in new shares to regain financial stability after a bad year that finished with the company posting a fourth quarter loss of (EURO)162 million.
In the same period a year ago, KPN had net profit of (EURO)176 million, but since then its situation has deteriorated rapidly.
Sales in the quarter fell 3.3 percent to (EURO)3.38 billion.
The planned share issue of (EURO)4 billion is nearly worth as much as the company's market value as of the close of trade Monday, (EURO)5.87 billion. In a sign of the importance of the offering's success to the company's future, Chief Executive Eelco Blok didn't turn up for the company's press conference in Amsterdam, preferring instead to travel to London to woo analysts.
KPN's company's woes began in earnest in the final months of 2011, when customers with smartphones starting ditching KPN's text message and voice offerings en masse for cheaper mobile Internet versions such as Skype and WhatsApp. When KPN tried to charge users extra for using such services in early 2012, consumers rebelled and Parliament quickly moved to make such surcharges illegal.
The company began hiking prices on mobile Internet service instead, though many users still have older, cheaper contracts. Halfway through the year it slashed planned dividends for 2012 from (EURO)0.90 per share to (EURO)0.35 per share.
In December, KPN paid the Dutch government an unexpectedly high (EURO)1.35 billion ($1.8 billion) in a bidding war to obtain frequencies for "4G," or fourth generation, high-speed mobile Internet services through 2030. It slashed dividends further, saying it would only pay (EURO)0.12 for 2012 and (EURO)0.03 in 2013.
The company has roughly (EURO)12.4 billion in debt, on a book value of (EURO)2.5 billion.
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