KPN plans return to growth through nationwide fibre

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The former Dutch incumbent also expects to save up to €250 million through digital transformation.

KPN said it would reach 50% penetration in 2023 and 65% of the Netherlands in 2025. At the moment its fibre coverage is about one third of the Netherlands, having passed about 300,000 homes in 2020.

Note that KPN's 5G strategy is focused on differentiated services for B2B customers in specific industries.

In a press statement, the company claimed that the, “Next wave of simplification and digitalisation [would] deliver additional cost savings of at least €250 million in 2021-2023", and that it is committed to progressive dividend, +3-5% annual growth covered by improving free cash flow.

Mass market

About 75% of KPN's revenues and 90% of its adjusted earnings before EBITDAL are generated in the mass-market – that is, consumer, SME, and wholesale segments. EBITDAL a variation of earnings before interest, tax, depreciation and amortisation (EBITDA) plus special losses during the financial year.

In 2021, KPN expects to invest €450-500 million in the accelerated fibre rollout, compared to €270-290 million in 2020. As a result, in 2021 CapEx will rise to €1.2 billon, and in 2022 and 2023 KPN expects CapEx of € 1.1-1.2 billion, "while fibre investments are maintained at an elevated level".

KPN expects adjusted EBITDA AL to grow in 2021 and reach a level of more than €2.45 billion 2023, driven by growing mass-market service revenues and continued cost savings. KPN expects free cash flow to be approximately €750 million in 2021 and more than €870 millio in 2023.

Boosting customers, cutting costs

KPN’s CEO, Joost Farwerck, said, "Our aim is to grow these mass-market service revenues by end 2021 through a growing customer base and by offering differentiated services and an outstanding digital experience to families and businesses.

“We will take the next step to accelerate digitalisation and simplification of our services, processes and organisation, building on the strong and simple operating model that we developed over the years. We'll continue equipping our vital and motivated workforce with the mindset and skill set required for our digital transformation as we adjust our way of working to the new normal. This will further improve customer experience and provide for a next wave of cost savings.“