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1. Company Snapshot

1.a. Company Description

Koninklijke KPN N.V. provides telecommunications and information technology (IT) services in the Netherlands.It operates through Consumer; Business; Wholesale; and Network, Operations & IT segments.The company offers fixed and mobile telephony, fixed and mobile broadband internet, and television services to retail consumers; infrastructure and network related IT solutions to business customers; and wholesale network services to third parties.


It also provides IT services, includes cloud and workspace, and cybersecurity; and interconnect traffic, visitor roaming, digital products, and NL-ix, an interconnect exchange, as well as sells handsets and peripheral equipment, and software licenses.The company was founded in 1881 and is headquartered in Rotterdam, the Netherlands.

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1.b. Last Insights on KPN

The recent performance of Koninklijke KPN N.V. has been driven by several positive factors. The company has commenced a €250m share buyback program, which has resulted in the repurchase of 12,934,964 ordinary shares for a total consideration of €49.0m as of April 14, 2025. This move is expected to structurally return additional capital to shareholders, enhancing their returns. Furthermore, KPN has successfully issued a €800m senior unsecured bond with a 3.375% coupon, increasing the average maturity of its outstanding bonds and providing flexibility for general corporate purposes. Additionally, the company has announced a 4.1% increase in its periodic dividend, set to be distributed on April 28, 2025.

1.c. Company Highlights

2. KPN's Q3 Earnings: A Closer Look at Financial Performance

KPN's Q3 financial performance was marked by a 1.7% year-over-year increase in Group service revenues, driven by growth across all segments, with Consumer service revenues growing by 1.1% and Wholesale service revenues increasing by 5.2%. Adjusted EBITDA grew by 4.4% year-over-year, or 2.3% on a comparable basis. The company's EPS came in at €0.06, beating analyst estimates of €0.05. Operational free cash flow increased by 12% year-to-date, driven by EBITDA growth, and free cash flow generation rebounded in Q3, mainly due to improved working capital and lower interest payments.

Publication Date: Oct -31

📋 Highlights
  • Group Service Revenue Growth:: Increased 1.7% YoY driven by all segments.
  • Adjusted EBITDA Growth:: Rose 4.4% YoY (2.3% comparable basis) despite cost shifts.
  • Operational Free Cash Flow:: Jumped 12% YTD due to EBITDA growth and lower costs.
  • Wholesale Revenue Expansion:: Surged 5.2% YoY from international roaming and fiber growth.
  • Midterm Revenue Target:: Aims for 3% annual service revenue growth (consumer: 1.5%, B2B: >3%, wholesale: 4%).

Revenue Growth Drivers

The revenue growth was driven by solid momentum in fixed and mobile consumer services, as well as ongoing growth in international sponsored roaming business in the Wholesale segment. Hans Figee noted that fixed service revenue growth is expected to be around 0.5% in Q4, while mobile consumer revenue growth is expected to be around 1.5%. SME revenue growth is expected to be around 4% to 5% in Q4 and next year, driven by good base and ARPU development.

Valuation Metrics

With a P/E Ratio of 19.13 and an EV/EBITDA of 8.51, the market seems to be pricing in moderate growth expectations. The Dividend Yield of 4.33% and Free Cash Flow Yield of 6.45% suggest that the company is generating significant cash flows, which could support future dividend payments or share buybacks. The ROE of 25.35% indicates a strong return on equity, while the Net Debt / EBITDA ratio of 2.54 suggests a manageable debt burden.

Outlook and Strategy

KPN's strategy is focused on keeping things simple, investing in the Netherlands, customers, and employees, and rewarding shareholders decently. The company expects service revenue growth to accelerate to 3% in the midterm, with consumer growth around 1.5%, B2B growth north of 3%, and wholesale growth around 4%. The company's fiber footprint is strong, with 80% of households connected, and it is committed to migrating customers from copper to fiber.

Competitive Environment

The competitive environment in broadband remains competitive, but KPN's fiberized network reduces the impact of competition from fixed wireless access or satellite. The company expects ARPUs in wholesale broadband to be supported by indexation, mix shift from copper to fiber, and specific agreements on retention and volume. Analysts estimate next year's revenue growth at 1.8%, which is slightly below the company's expected growth rate.

3. NewsRoom

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KPN delivers on Connect, Activate & Grow strategy

Nov -05

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Koninklijke KPN NV (KKPNF) Q3 Earnings and Revenues Lag Estimates

Oct -28

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KPN maintains commercial momentum; on track to reach FY outlook

Oct -28

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Investors in Koninklijke KPN (AMS:KPN) have seen impressive returns of 122% over the past five years

Oct -28

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Societe Generale: shares & voting rights as of 31 August 2025

Sep -09

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Deutsche Bank (XTRA:DBK): Assessing Valuation After a Period of Quiet Share Price Momentum

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.90%)

6. Segments

Consumer

Expected Growth: 1.8%

KPN's 1.8% consumer segment growth is driven by increasing demand for high-speed internet and TV services, fueled by the rise of streaming and online entertainment. Additionally, KPN's focus on customer experience, network quality, and competitive pricing strategies have contributed to its growth in the Dutch market.

Business

Expected Growth: 2.2%

Koninklijke KPN N.V.'s 2.2% growth is driven by increasing demand for fiber-based services, expansion of 5G network, and growing adoption of IoT solutions. Additionally, the company's focus on cost savings initiatives and investments in digital transformation have improved operational efficiency, contributing to the growth.

Wholesale

Expected Growth: 1.5%

KPN's wholesale segment growth of 1.5% is driven by increasing demand for data services, expansion of 5G network, and strategic partnerships with international carriers. Additionally, growing adoption of IoT and cloud services among enterprises contributes to the growth. Furthermore, KPN's focus on network quality and reliability enhancements also supports the segment's growth.

Network, Operations & IT

Expected Growth: 2.5%

KPN's 2.5% growth is driven by its Network segment, fueled by increasing demand for 5G and fiber-based services. Operations efficiency improvements and cost savings initiatives also contribute to growth. IT segment growth is driven by rising demand for digital services, such as cybersecurity and cloud computing, as well as investments in IT infrastructure and digital transformation.

Other

Expected Growth: 1.2%

KPN's 'Other' segment growth of 1.2% is driven by increasing demand for IT services, particularly in cybersecurity and cloud computing. Additionally, the company's focus on digital transformation and cost savings initiatives have contributed to this growth. Furthermore, KPN's partnerships with other companies to develop innovative solutions have also played a role in driving this segment's growth.

7. Detailed Products

Fixed Telephony

Traditional landline telephone services for residential and business customers

Mobile Telephony

Mobile phone services for personal and business use, including voice, data and SMS

Internet Services

Broadband internet access for residential and business customers

TV Services

IPTV services offering live TV, on-demand content, and interactive services

ICT Services

Managed IT services, including cloud, cybersecurity, and data center services

Network Services

Wholesale network services for other telecom operators and service providers

Cyber Security Services

Managed security services, including threat detection, incident response, and security consulting

Data Center Services

Colocation, hosting, and cloud services for business customers

8. Koninklijke KPN N.V.'s Porter Forces

Forces Ranking

Threat Of Substitutes

KPN faces moderate threat from substitutes, as customers have limited alternatives for fixed-line and mobile services. However, the rise of over-the-top (OTT) services and VoIP technology poses a moderate threat.

Bargaining Power Of Customers

KPN's customers have low bargaining power due to the lack of switching options and the company's strong market position.

Bargaining Power Of Suppliers

KPN's suppliers, such as network equipment providers, have moderate bargaining power due to the presence of multiple suppliers and the company's significant purchasing power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The Dutch telecom market is highly competitive, with multiple players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 73.29%
Debt Cost 4.37%
Equity Weight 26.71%
Equity Cost 5.09%
WACC 4.56%
Leverage 274.38%

11. Quality Control: Koninklijke KPN N.V. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.93$

Current Price

3.93$

Potential

-0.00%

Expected Cash-Flows